Financing Public Higher Education in the Philippines: An Examination of the Applicability of Income Contingent Student Loan Scheme

Type Conference Paper - 10th National Convention on Statistics (NCS)
Title Financing Public Higher Education in the Philippines: An Examination of the Applicability of Income Contingent Student Loan Scheme
Author(s)
Publication (Day/Month/Year) 2007
URL http://112.199.101.200/ncs/10thNCS/papers/contributed papers/cps-09/cps09-01.pdf
Abstract
This study is a response to the suggestion that the Philippines adopt an income contingent student loan scheme (ICSL), particularly to address cost recovery and funding concerns in public higher education. Under this scheme, the government
pays for the cost of education while the students are still studying. The government collects repayments only when students have left the university and are earning incomes. The periodic repayment is contingent on the borrower’s income. The adoption of ICSL in countries such as Australia and New Zealand has facilitated the successful shift from a system that provides of a high level of subsidy to one that provides a low level of subsidy, without apparent adverse effects on higher education participation. However, it is not clear how ICSL can work in the Philippines. Consequently, this paper explores the applicability of an ICSL scheme in the Philippine context. A spreadsheet simulation model was built based on the nature of loan repayment under the scheme. The model incorporates several key parameters affecting a borrower’s ability to repay an ICSL debt. It will be seen that with plausible parameters reflecting the specific circumstances of the Philippines, an income contingent student loan scheme would not be a major solution to the cost recovery and funding concerns in public higher education.

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