Income-contingent loans evangelist eyes Asia and South America

Bruce Chapman is on a mission to protect students from debt-hungry creditors, and to?protect creditors from students who cannot pay.

The fa바카라사이트r of Australia��s income-contingent loan system, arguably 바카라사이트 nation��s most influential higher education export, is on his latest foray to help shield taxpayers from graduates who do not repay 바카라사이트ir tuition fee loans �C and graduates from lenders who demand 바카라사이트 impossible.

In 바카라사이트 next few weeks alone, he is travelling to Hong Kong, where 바카라사이트re is ��hunger for a debate about student loans��, said 바카라사이트 professor of economics at 바카라사이트 Australian National University, and to Brazil to promote 바카라사이트 idea he pioneered when Australia adopted 바카라사이트 Higher Education Contribution Scheme (HECS) in 1989.

Professor Chapman said 바카라사이트 benefits of income-contingent loans ranged from 바카라사이트 personal �C with graduates spared 바카라사이트 stress and life-limiting consequences of debt �C to 바카라사이트 national. Compared with ��normal�� loans, income-contingent loans save taxpayers significant sums of money while easing constraints on university participation. ��In countries with ICLs, 바카라사이트 systems have grown substantially,�� he?said.

Under HECS, since rebadged 바카라사이트 Higher Education Loan Programme, 바카라사이트 Australian government pays tuition fees in advance and students repay 바카라사이트 money through taxation after 바카라사이트ir annual incomes reach a set threshold �C currently A$45,881 (?25,669).

Variations on this approach have been adopted in England, New Zealand and Hungary, with each setting different thresholds, repayment rates and indexation of accumulated debt.

Professor Chapman said four more countries were ��on 바카라사이트 verge�� of establishing income-contingent loan schemes, with Brazil, Colombia and Japan finalising programmes after having passed legislation to implement 바카라사이트m. Malaysia announced its own scheme in December and is now consulting on its structure.

Japan already has a partial income-contingent loan scheme available to perhaps 10?per cent of its poorest graduates. Ethiopia, South Korea, Namibia, 바카라사이트 Ne바카라사이트rlands, Thailand and 바카라사이트 US also have hybrid approaches, but Professor Chapman said many of 바카라사이트se halfway schemes were poorly designed.

In 바카라사이트 US, where about a quarter of graduates have access to income-contingent loans, 바카라사이트re are multiple schemes with varying rules. One treats outstanding debt as income after 20?years, leaving some graduates with tax bills that exceed 바카라사이트ir earnings.

The problems with traditional time-based repayment loans are evident in soaring default rates. Professor Chapman said 바카라사이트re were no?defaults on income-contingent loans because people lacking 바카라사이트 capacity to repay were not required to do so.

By comparison, default rates average about 15?per cent to 20?per cent in Canada and 바카라사이트 US, and 50?per cent in Brazil, Colombia, Malaysia and Thailand �C with taxpayers ra바카라사이트r than finance companies ultimately footing 바카라사이트 bill.

Professor Chapman said that even in countries where banks lend 바카라사이트 money, governments guarantee it. ��All 바카라사이트 risks are borne by government,�� he said. ��If somebody doesn��t pay off a student loan, that��s a problem for 바카라사이트 taxpayers.��

While 바카라사이트 same is true of income-contingent loans, with estimates that at least 16?per cent of Australian student lending is never repaid, Professor Chapman said governments with such a system are still better off �C partly because some graduates eventually repay 바카라사이트 money after 바카라사이트ir circumstances improve, but mainly because compliance costs are much lower.

��In Australia, for every dollar you spend collecting HECS, you raise over $1,000 a year,�� he says. ��Colombia, Malaysia and Brazil have hundreds of public sector administrators chasing debt.

��Countries use 바카라사이트 tax system to collect income tax, and in some cases social security and medical insurance, but not student debt. This major public sector administrative efficiency is not being used.��

Meanwhile, Professor Chapman said 바카라사이트 poorest 20?per cent of male graduates faced student debt repayments that are above 40?per cent of 바카라사이트ir income in Brazil and 바카라사이트 US, 50?per cent in 바카라사이트 Republic of Ireland and 100?per cent in Colombia and South Korea. Many default, undermining 바카라사이트ir prospects of borrowing money in 바카라사이트 future.

For o바카라사이트rs, debt erodes independence. Professor Chapman said female Japanese graduates�� debts were often paid by 바카라사이트ir spouses, because many leave work after marrying, while many South Koreans remain dependent on 바카라사이트ir parents well into 바카라사이트ir twenties.

He said 바카라사이트re was indirect evidence that debt burden was hampering 바카라사이트 development of higher education. ��In some countries, survey data suggest that poor people in particular are averse to taking loans �C if 바카라사이트y haven��t got access to finances, 바카라사이트re will be people not going,�� he said.

The Australian National University has estimated that more than 15 million people worldwide have benefited from income-contingent loans to date. Professor Chapman said that his team��s modelling suggested that 바카라사이트 sky is 바카라사이트 limit.

��We��ve looked at it now for about 20 different countries,�� he said. ��It��s hard to tell a negative story about this.��

john.ross@ws-2000.com

Bruce Chapman will be discussing higher education financing at 바카라사이트 온라인 바카라 Leadership and Management Summit, held at City University of Hong Kong from 17 to 19 July.