Income Contingent Loans

As the Income Contigent Loans Bill is considered by US congress, ICL have risen to the forefront of economic discourse. ICL are collected through the income taxation system and are repaid only when future incomes exceed a specified level. ICL were first introduced in Australia in 1989, to help college students finance their tuition costs and since then many countries have followed this policy approach. Joseph Stiglitz, Timothy Higgins and Bruce Chapman along with a host of internationally recognised experts, who have been instrumental in impacting national policy in this field, explore the prospect of the application of the basic principles of ICL into many other potential areas of social and economic policy such as paid parental leave; recompensing poor countries for skilled migrant emigration; legal aid for civil disputes; a profit-contingent loan arrangement for research and development for small and medium enterprises; payment of low-level criminal fines; and for out-of-pocket health care expenditure needs. This text uses case studies to evaluate previously implemented ICL schemes where interest rate subsidies are usually the norm, and questions the merits of this approach. It puts forward an alternative approach which takes the form of human capital contracts, as well as examining hybrid schemes which combine the attractive aspects of both arrangements. Case studies are used to examine the prospects for ICL schemes, in Malaysia, Germany, Thailand, Chile and Colombia. The volume also looks at prospects of adopting ICL in developing countries and considers the difficulties involved in having an effective collection mechanism, since this approach to higher education financing usually requires a comprehensive and efficient income tax system. This book offers a comprehensive study of ICL and is essential reading for scholars, researches and policy makers in social and economic policy.