ABSTRACT
In many instances, imposing cost-recovery — either for living expenses or for instructional costs — has proved to be politically difficult, and has raised the problem of how to relieve the pressure on students who cannot afford to pay. To resolve this problem, much discussion in the economics literature has advocated student loans to enable students to defer payment for the costs of attending higher education until they are earning incomes. We refer more broadly to deferred payment programs to include those policy instruments which secure payment from the future incomes of students, rather than their current resources. Extensive theoretical and comparative literature on student loans has been developed by Maureen Woodhall. A particular emphasis of her work has been on the potential role of loans in developing countries (Woodhall 1983, 1987a, 1987b, 1990a, 1991). Johnstone (1986) has surveyed student support mechanisms in industrial countries. More theoretical discussions have been developed by Mingat et al. (1985), and Psacharopoulos and Woodhall (1985). In recent years, alternative formats for loans, particularly loans with income contingent repayments, have received considerable attention (Barnes and Barr 1988; Barr 1989; Woodhall 1989). Such loans with income-contingent repayments are misleadingly labled ‘income-contingent loans’ in the literature; in this chapter we use the more common term.
