The New York Times has carried out a survey comparing the student loan schemes of the US, Sweden, Australia and the UK, finding that the Australian system is the best of the four.
A judging panel of eleven education policy experts, including Professor Bruce Chapman of the ANU College of Business and Economics, compared the four schemes.
The current student loan schemes in the US and Sweden are time-based repayment loans, which operate in a similar way to a mortgage. If students are not able to meet their repayments, they default on the loan, which then affects their credit rating.
In contrast, Australia and the UK have income contingent loans, where students only begin repaying their debts when their income reaches a set threshold.
“The results of this survey are very clear and mean that there is a consensus from international student loan experts that income contingent loans with tuition charges are preferred to other arrangements,” said Professor Chapman.
“While there was unanimous support for Australia in the ‘final’, this doesn’t mean our system can’t be improved.”
Professor Chapman was instrumental in developing the first income contingent scheme for student loans, Australia’s Higher Education Contribution Scheme (HECS) in 1989.
Since then, the adoption of income contingent loans has gained momentum internationally, with HECS-style schemes replicated in New Zealand, England, Wales, Hungary, Ethiopia, South Korea and the Netherlands.
Professor Chapman is currently leading a research group, supported by the ANU College of Business and Economics, which brings together student loans experts from across the world, with the aim of extending international research and policy on student loan schemes.
“The focus of this study group has been on the application of econometric methods designed to illuminate the consequences of different types of student loans systems” said Professor Chapman
“An important point from the New York Times survey results is an implicit endorsement of the conceptual and policy basis of the CBE higher education financing group.”
To read more about Professor Bruce Chapman’s work on income contingent loans, read the ANU Reporter story HECS scheme leading the world.
The ANU College of Business and Economics are committed to making postgraduate level education more accessible. Find out more about our 50% tuition fee wavier scholarships for postgraduate programs.
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This article originally appeared on the ANU College of Business and Economics website.