In general, the university student body is made up of a disproportionate number of those from relatively advantaged socio-economic backgrounds, the vast majority of whom experience significant economic and social advances as graduates. Not to charge the direct beneficiaries a small proportion of the costs means that the financial burden for the support of higher education falls on all taxpayers, the vast majority of whom do not have access to the system. However, Chapman argues, charging upfront fees is not the correct policy response, because this has the capacity to deny access of the system to the poor. The private banking system will not offer loans for educational investments because there is no collateral to be sold in the event of default. While governments typically recognise this problem by guaranteeing loan repayments, there is a potential problem that is not solved by this approach.
Chapman considers it useful to put aspects of the Australian debate into the UK policy context.
There is little doubt, he contends, that schemes such as HECS could be readily adopted in this country. Conceptual Issues and the Australian Experience with Income Contingent Charges for Higher Education' by Bruce Chapman is published in the May 1997 issue of the Economic Journal . Chapman is Professor of Economics at the Centre for Economic Policy Research, Research School of Social Sciences, Australian National University, GPO Box 4, Canberra, ACT 0200, Australia.