IZA DP No. 5626: Lifecycle Impact of Alternative Higher Education Finance Systems in Ireland
published in: Economic and Social Review, 2011, 42(3), 237–270
With increasing numbers of young people participating in higher education in Ireland and a heavy reliance of higher education institutions on state funding, the introduction of an alternative finance system for Ireland has been muted over the past number of years. However, no study has been conducted to gauge the potential impact of such measures. In this chapter we utilize a dynamic microsimulation model developed for Ireland to simulate the impact of both an income contingent loan system (ICL) and a graduate tax system from a fiscal and redistributional viewpoint and to analyze the repayment length under the former system. Our results suggest that an ICL system would is more equitable, while the graduate tax system would be a better alternative from a fiscal viewpoint. The results also illustrate the important of the interest rate attached to any future student loan system within Ireland from a fiscal viewpoint.