Income-contingent loans ¡®could solve US student debt crisis¡¯

The introduction of income-contingent student loans in 바카라사이트 US could solve 바카라사이트 country¡¯s student financing ¡°crisis¡±, academics say.

Research from four economics scholars based in 바카라사이트 UK, 바카라사이트 US and Australia suggests that 바카라사이트 adoption of 바카라사이트 loans model used in Australia and England could alleviate 바카라사이트 difficulties that US students face in repaying university debt.

US mortgage-style loans, such as Stafford loans, have fixed monthly repayments that are made over a set period, placing high repayment burdens on low-earning graduates, according to 바카라사이트 paper, ¡°Getting student financing right in 바카라사이트 US: lessons from Australia and England¡±, from University College London¡¯s Centre for Global Higher Education.

This means that default rates?are ¡°at an all-time high¡±, it says, mainly because of 바카라사이트 very large repayment burdens for low-earning BA graduates early in 바카라사이트ir career.

In contrast, income-contingent loans mean that 바카라사이트 regular amount to be paid by 바카라사이트 student borrower depends on his or her income. This protects low-earning graduates from defaulting or experiencing financial difficulty, and simultaneously ensures that taxpayer subsidies are kept low, according to 바카라사이트 researchers.

US graduates owe $1.3 trillion (?1 trillion) in student loans, with 7 million borrowers in default and even more in arrears, 바카라사이트 paper adds.

¡°The US student loan system is in crisis,¡± it says.

The research was conducted by Nicholas Barr, professor of public economics at 바카라사이트 London School of Economics; Bruce Chapman, director of policy impact at 바카라사이트 Australian National University; Lorraine Dearden, professor of economics at 바카라사이트 UCL Institute of Education and research fellow in education at 바카라사이트 Institute for Fiscal Studies; and Susan Dynarski, professor of public policy, education and economics at 바카라사이트 University of Michigan.

Using data from 바카라사이트 US¡¯ Current Population Survey, 바카라사이트 paper argues that a ¡°well-designed¡± income-contingent loan system would overcome 바카라사이트 financing crisis in 바카라사이트 US in a ¡°simple, efficient, equitable and cost-effective way¡±.

It suggests that such a system should be based on current earnings and written off after a certain number of years or at retirement or death. Meanwhile, graduates with ¡°good¡± earnings should repay all 바카라사이트 loan, or for high earners more than 100 per cent, so that 바카라사이트 loan can make a loss on graduates with low lifetime earnings, it adds.

ellie.bothwell@tesglobal.com