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Many financially distressed students who qualify for federal assistance plans with interest moratorium and principal forgiveness instead accrue interest over long periods of nonpayment. This loan mismanagement is associated with higher delinquency. Mismanagement varies significantly across student gender and race: it is more prominent among male and non-white students. Mismanagement also varies across loan servicers, depending on proxies for student-adverse servicer policies. We consider explanations based on student selection and servicer treatment for loan mismanagement. Student financial literacy plays an important role but variation in treatment on the part of loan servicers appears more important. Authors have furnished an Internet Appendix , which is available on the Oxford University Press Web site next to the link to the final published paper online [ABSTRACT FROM AUTHOR]

In this paper, we study the elasticity of educational spending with respect to changing student numbers, in a system where educational spending is autonomously determined at a regional level. While many studies focus on the potential effect of an ageing society on educational spending, only a few explicitly analyse the direct effect of changing cohort sizes. We find that education expenditures respond rather loosely to changing student numbers and that the elasticity strongly depends on regional and institutional settings. In rural areas, for instance, educational spending tends to be completely inelastic, which raises questions regarding both, efficiency and equity concerns. [ABSTRACT FROM AUTHOR]

Objectives aimed at increasing higher education productivity, for instance, measured by credits per student, have stimulated the use of performance-based funding (PBF) by higher education institutions (HEIs). On theoretical grounds, PBF is expected to speed-up study program capacity adjustments through (re)allocations of study places. We conclude from analyses of Norwegian data that study places are adjusted efficiently if there are binding capacity restrictions at the institution level, or competition for students. Strengthened PBF does not affect long-run adjustments. Instead, admissions seem to adjust to secure full enrollment. The results provide an explanation of why very few positive effects of PBF in higher education are found in the literature. Given continued use of PBF to enhance productivity, a likely policy implication is to impose tighter restrictions on the total number of study places allocated to HEIs, or to change the price structure of the PBF model. [ABSTRACT FROM AUTHOR]

The education system in Hungary has been greatly criticized in the last decades regarding the standards and quality of education and its ignorance towards labour market demands. The present study focuses on factors affecting the quality of education. The first part of the research analyses the relationship between public education and competitiveness in Hungary. In the second part of the research, with the help of the linear regression model and of other statistical and mathematical tools, we tried to identify those explanatory variables which influence and mostly determine the quality of public education.

We develop a model to evaluate the aggregate impact of college finance in an environment with entrepreneurship. The calibrated model captures the stylized fact that entrepreneurs with college are more common and more profitable in the United States. The calibration indicates this is mainly because higher labor earnings allow college‐educated agents to ameliorate credit constraints if and when they eventually become entrepreneurs. Changes in financing constraints on entrepreneurs can thus affect college attendance, and changes in financing constraints on college can affect entrepreneurship rates as well. [ABSTRACT FROM AUTHOR]

Economic theory establishes that pension privatization weakens the link between old and young and so reduces the incentive to invest in public education in an economy with lower return rate of capital than growth rate of wage. However, empirical studies of the link change are few. In this paper, we investigate the effects of pension privatization and the central government’s subsidy to individual accounts on public education spending in a three-period overlapping generation model. And then, we take contemporary pension reforms in a number of Chinese provinces as offering natural experiment conditions. Using a difference-in-difference framework and 282 municipal districts panel data over years 1998-2009, we test the pension-education theoretical link change. Both our theoretical and empirical results confirm that pension privatization is adversely associated with local public spending on education in China. Private pension subsidies, moreover, magnify this effect. Our study supports the theoretical assertion and selective empirical findings of a negative intergenerational effect of pension privatization. [ABSTRACT FROM AUTHOR]

The existing models of mixed public-private school systems usually capture only the decreasing average cost faced by public schools, whereas empirical studies find evidence of it for private schools as well. Motivated by this, an equilibrium model of a mixed public-private school system is studied in this paper, whereby private schools also face decreasing average cost over enrollment. In the model, households, heterogeneous with respect to exogenously specified income and child’s ability, choose among a public and a private school. Private school charges tuition whereas public school is free. Public school spending is financed by income tax revenue collected from all households and the tax rate is determined via majority voting. Achievement of a child depends on its ability and education spending. Under the assumptions on the parameters of the model, a joint lognormal distribution of income and ability, and a Cobb-Douglas utility, majority voting equilibrium is numerically shown to exist. The model is calibrated to match certain statistics from the 2013 Turkish data. Using the calibrated model, we compare the benchmark for a mixed public-private school system with a pure public school system to understand the impact of shutting down some of the private schools in Turkey following the July 15 coup attempt. We find that mean achievement and variance of achievement after high school is 0.039% higher and 0.013% lower respectively in a pure public school system. [ABSTRACT FROM AUTHOR]

This paper analyzes the effects of immigration on the size and quality of public education using a quantitative political economy model that allows for a heterogeneous immigrant population. Our analysis distinguishes between short and long-run effects and accounts for the consequences of naturalization and assimilation. We use the model to analyze Spain's large 2000–2008 immigration wave. We find that immigration led to a 15% increase in public enrollment in the short run, together with a 3% reduction in public education spending and almost a 1 percentage-point increase in the share of native households using private schools. Depending on the eventual degree of assimilation, these trends will be greatly intensified or mitigated once immigrants naturalize and gain the right to vote. Our analysis suggests that assimilation in terms of family size and the value assigned to children's education are the most relevant dimensions quantitatively. We also show that immigration policies that favor one group over another can significantly alter the overall effects of immigration on the schooling system. [ABSTRACT FROM AUTHOR]

This paper studies the short- and long-term impacts of an increase in merit-based scholarships with a novel data set containing 1114 recipients from the 2004 and 2005 doctoral competitions of the Social Science and Humanities Research Council (SSHRC). Using the scores received by recipients and the funding thresholds, I take advantage of a regression discontinuity design to estimate the causal impact of an increase in scholarship amount on locational choice and career outcomes of recipients. First, I find no evidence that recipients are induced to remain in Canada when they are promised a larger scholarship if they study in Canada. Second, there is no evidence that receiving a larger scholarship affects the probability of PhD completion within either five or nine years. Third, there is some evidence that a larger scholarship does increase the probability of having a tenure-track academic position nine years after receiving the award by approximately 15 percentage points. This result only holds for students who were initially awarded the scholarship in their second year. [ABSTRACT FROM AUTHOR]

We study the effects of class size reduction (CSR) in upper grades (10–12) on college entrance exam scores, using merged Korean administrative data. This data set provides a rare opportunity to investigate the effects of high school class sizes on student outcomes. Seoul has maintained strong restrictions on educational choices to achieve the ideal of equal educational opportunities. The identification mainly comes from the large-scale CSR policy implemented in 2002. By using the within-school between-cohort variation in class size intended by the CSR policy, we find that the effects of high school class sizes on test scores are small with tight confidence intervals. We confirm this result by using the additional within-school variation in class size arising from the major division, especially the implicit rule of class allocation between majors. Further, the distributional effects are no different from the average effects either. [ABSTRACT FROM AUTHOR]

The paper addresses the problem of the financial regulations' impact on the share of private financing in higher education institutions (HEIs). The authors postulate the trade-off between the size and stability of public financing and the regulations fostering stability of HEIs’ funds. If the public sources are insufficient then the regulations increasing the stability of financing are expected. Such a policy increases the private-source financing at the expense of public-source financing, and it can be tested econometrically. The predictions are tightly related to the portfolio theory of Markowitz, where risk-averse management of HEIs minimizes the variance of available funds. The econometric analysis covers the impact of selected financial regulations on the private financing of tertiary-level education. The components of financial regulations are distinguished on the basis of the legal comparative study. The authors identify four financial regulations whose prevalence affects the diversification of European universities’ financing and can improve their financial stability. [ABSTRACT FROM AUTHOR]

This study measures the efficiency of government secondary schools in New South Wales, Australia, using a two-stage semi-parametric production frontier approach to schooling. In contrast to previous research comparing school performance with two-stage data envelopment analysis (DEA), we control for prior academic achievement of students by using a rich data set from 2008 to 2010. We employ detailed financial data for deriving the envelope for the efficient production frontier of the schools. Using Simar and Wilson's (J Econ 136:31-64, 2007, J Prod Anal 36:205-218, 2011a) double bootstrap procedure for two-stage DEA, the study finds that schools with lower total student numbers, a higher average of years of service of teachers, a higher ratio of special education students that attracts extra government funding, and girls only do better than other schools. On the other hand, a negative influence comes from a school's location in provincial and outer metropolitan areas. An important result is that the socio-economic background of students attending a school has no significant effect on their academic performance, whereas higher prior academic achievements have a positive and statistically significant impact on student achievement. These results are relevant to decision makers for the school sector, in particular for funding criteria contained in the Gonski (Review of funding for schooling - Final report (December). Canberra: Commonwealth Government of Australia, 2011) review report. [ABSTRACT FROM AUTHOR]

Policy debates around the topic of educational vouchers as an approach to improve the public educational system are still ongoing and a consensus on the potential benefits or drawbacks has not been reached yet. This paper models the distributional processes entailed by two alternative educational voucher systems, universal and target vouchers , by using an agent-based model of a highly heterogeneous school district. Using this approach allows to track which students actually switch schools and thereby evaluate peer effects. At the same it is possible to model an endogenous reaction of public schools in order to assess their reaction to increased competition. The results indicate an ambiguous effect of universal vouchers on low-income students. The introduction has a negative peer effect on students in low-performing schools due to “ cream skimming ”, i.e. highly motivated students leaving the schools. In contrast, students who switch to better schools observe a positive effect. The negative effects are partly alleviated by low- performing schools improving their educational services as a response to a decline in enrollment. When examining target vouchers which are a function of student ability, the paper shows that they allow the school district to benefit from the increased competition while avoiding the deterioration of the peer group. [ABSTRACT FROM AUTHOR]

A recent education policy Turkish government is wishing to undertake is to shut down all private supplementary education centers (SECs) unless SECs manage to convert into a private school. With this policy, the government is willing to increase equality of opportunity among students. We show quantitatively that the policy, in fact, leads to a decrease in equality of opportunity since SECs are given the option to convert into private schools. We use a political economy model of education at which households, heterogeneous with respect to exogenously set income, choose among a continuum of private schools differentiated by tuition and a public school. Households choosing the public school can privately supplement their child's education spending in any amount. Public school is free of charge, and its spending is financed by income tax revenue collected from all households. Income tax rate is determined by majority voting. Achievement of a child depends only on educational spending. We calibrate the model's parameters by matching certain targets from 2013 Turkish data. We then exogenously restrict the supplemental education spending to zero in a counterfactual experiment. We find that variance of achievement (or inequality of opportunity) increases by 23.51% and mean achievement decreases by 1.74%. [ABSTRACT FROM AUTHOR]

In higher education systems that are partly tax funded, a country might not be willing to subsidize the education of international students who might leave after graduation. This paper analyzes how student migration affects governmental decisions regarding the private funding share of higher education for 22 OECD countries for the period of 2000–2011. Based on fixed effects estimations, we find a significant positive correlation. This result is robust to changes in the specification, including estimations for country groups and for an expanded lag structure. The use of an instrumental variable approach supports a causal interpretation. [ABSTRACT FROM PUBLISHER]

In this paper, we estimate the effect of receiving financial aid for a cohort of students who enrolled at Politecnico di Milano (Italy) in the year 2007/2008, through a propensity score matching approach. Using administrative data about these students for four years, the impact of the financial aid on several dimensions of academic performance was evaluated: formative credits obtained after one year, dropout probability in the first and second year, graduation in the legal duration of the course, and graduation after four years. Overall, a positive and statistically significant effect of the grant is found and this finding is stable across several robustness checks. Exploring the heterogeneity of this effect, it is demonstrated that the effect is higher for immigrants, Italians who moved from another region for studying, and students attending an engineering course. Evidence that unobservable factors (such as students’ own intrinsic academic motivation) account for an important part of the estimated impact of the financial aid is also found. [ABSTRACT FROM PUBLISHER]

The degree to which students are able to make adequate repayments on their student loans and avoid default is of special concern for colleges. If too many former students go into default, the college will face sanctions by the federal government and lose eligibility to provide currently enrolled students federal financial aid, such as the Pell grant. To avoid these sanctions, some colleges have chosen not to participate in federal loan programs by excluding loans from students' financial aid packages. In this article, I investigate the student-level impacts associated with the decision of community colleges to opt out of the Stafford loan program. Utilizing administrative records from over 50 community colleges located in a single state, I estimate the within-college differences in outcomes for Pell-eligible students before and after an institution opts out of the federal loan program. I find that Pell-eligible students enrolling when the community college offered federal loans were 7.6 percentage points more likely to borrow than Pell-eligible students who enrolled when the institutions opted out. Overall borrowing also increased by $368 a year. I also find that students borrowing a loan attempted 19 additional credits in their first year of enrollment and were more likely to attempt and complete math and science courses than non-borrowers. [ABSTRACT FROM AUTHOR]

Does the revolving door phenomenon erode bureaucratic integrity? To answer this question, we undertake a quantitative case study of a private university in South Korea that recruited a former vice minister of education as its president. Specifically, we investigate whether after employing this high-ranking former public official the university received favorable treatment from the education ministry in terms of funding. Estimates from difference-in-difference, triple difference, and synthetic control methods all suggest that the high-profile public official's recruitment is associated with financial benefits from the official's former employing agency; no such advantage, however, was observed for benefits from other agencies. This result offers suggestive but compelling evidence that the revolving door distorts the allocation of government resources; the financial benefits the university received are due not to the recruited official's greater competence, expertise, or knowledge but rather to his implicit collusion with the government. [ABSTRACT FROM AUTHOR]

To what extent can offering more choice in schooling lead to ‘cream skimming,’ or the sorting of students by ability? I study whether increased choice leads to student sorting by ability into high schools in the Greater Toronto Area. On average, 41% of students ‘opt out’ of the high school to which they would normally be assigned based on their residence. Students are more likely to opt out in areas where accessibility to other schools is greatest due to population density and explicit ‘open enrolment’ policies. While students of higher ability are generally more likely to opt out, an interaction term between school choice and ability is insignificant, suggesting that increased choice does not have differential impacts by student ability. Findings are robust to changes in assumptions about instrument exogeneity. [ABSTRACT FROM AUTHOR]

School spending in England has been relatively protected over the past five years, with day-to-day school spending per pupil rising by about 0.6 per cent in real terms. This contrasts with cuts to other areas of education spending and across other areas of government spending more generally. This real-terms increase has been delivered by an increase in funding going to the most disadvantaged pupils via the pupil premium. (Other types of funding were frozen in cash terms per pupil.) One of the consequences of this reform is that funding is increasingly concentrated on schools catering for the highest proportions of pupils from disadvantaged backgrounds. This is in contrast to school systems in some other countries (for example, the US), where resources tend to be more highly correlated with local property values. Looking forward, rising pupil numbers, together with reforms that will increase the cost of employing staff, will contribute to increasing school costs over the coming years, with school spending needing to increase by at least 20 per cent in cash terms just to keep funding per pupil constant in real terms after accounting for expected cost increases for schools. [ABSTRACT FROM AUTHOR]

This study presents an overlapping-generations model with altruism towards children. We characterize a Markov-perfect political equilibrium of voting over two policy issues, public education for the young and social security for the old. The model potentially generates two types of political equilibria, one favoring public education and the other favoring social security. One equilibrium is selected by the government to maximize its objective. It is shown that (i) longevity affects equilibrium selection and relevant policy choices; and (ii) private education as an alternative to public education and a Markov-perfect political equilibrium can generate the two types of equilibria. [ABSTRACT FROM AUTHOR]

It is generally agreed that the funding base for German universities is inadequate and perhaps the time has come for serious consideration of the imposition of nontrivial tuition charges. This article compares conventional and income contingent loans (ICLs) for financing tuition fees at German universities. Two aspects are considered: the size of repayment burdens associated with mortgage-style loans, and the time structure of revenue to the government from a hypothetical ICL. We find that tuition fees could increase considerably with the use of an ICL system similar to policy approaches used in Australia, England and New Zealand. [ABSTRACT FROM PUBLISHER]

This article explores how inequities in public K-12 school spending impact the distribution of economic well-being across American households with public school students in 1989 and 2000. Adapting concepts from the public finance literature, I explore the impact of school spending on the vertical and horizontal equity and its impact relative to other types of public spending on social programs and taxation. Conventionally, vertical equity refers to the size of the income gaps between households. Horizontal equity refers to the ranking of households along the income distribution with any change in ranks producing horizontal inequity. My main findings show that school spending, when converted into a component of income, served to reduce extended-income inequality through improvements in vertical equity without the discriminatory implications of exacerbating horizontal inequity across households. Additionally, this impact was at least as large as that of spending on other social programs. This finding bolsters standard arguments for equity and progressivity of school finance across students. [ABSTRACT FROM AUTHOR]

This paper examines how college educational debt affects various post-baccalaureate decisions of bachelor’s degree recipients. I employ the Baccalaureate and Beyond 93/97 survey data. Using college-aid policies as instrumental variables to correct for the endogeneity of student college debt level, I find that for public college graduates, college debt has a negative and significant effect on graduate school attendance. This negative effect is concentrated on more costly programs associated with doctoral, MBA, and first professional (FP) degrees, and debt has no effect on the choice of a master’s program. For private college students, debt does not have an effect on the overall graduate school attendance, but this absence of effect conceals the differential effects of debt on different graduate programs – debt has a positive and significant effect on the choice of an MBA or an FP program, and a zero effect on other programs. For both public and private college students, debt has no effects on early career choices such as salary, sector of occupation, marital status, and homeownership. [ABSTRACT FROM PUBLISHER]

This paper investigates the financial implications of the higher education funding regime to be introduced in English universities in September 2012. The analysis is based on simulated lifetime earnings profiles among graduates, linked to imputed information on parental incomes and institution and course choices. We find that, on average, total gross tuition fees will increase by over £15,000 as a result of the reforms; nevertheless, students will be significantly better off while they study due to the increased generosity of student support. The average graduate will be roughly £8,600 worse off over their lifetime, while universities will, on average, be better off as they are more than able to make up for the loss of substantial amounts of direct public funding through higher fees. The taxpayer is set to lose 33p of every £1 loaned to students (up from 25p under the current system) because of the generosity of the loan repayment terms, although the new regime is still expected to save the taxpayer around £3,000 per graduate overall. The reforms involve a substantial shift in the incidence of the cost of higher education away from the public sector and towards the private sector. In terms of the likely implications for social mobility, our work confirms that the new funding regime is actually more progressive than its predecessor: the poorest 29 per cent of graduates will be better off under the new system, while other graduates will be worse off. Moreover, the richest 16 per cent of graduates will pay back more than they borrow, while others will be subsidised. If prospective students from poorer backgrounds are aware of these facts, then, in theory, the new funding system should not dissuade them from applying to university - and thus it would increase, rather than reduce, social mobility in the long run. However, this will require a lack of debt aversion amongst students from the poorest backgrounds, and the ability for the government and universities to provide students with clear information about the likely costs of going to university. [ABSTRACT FROM AUTHOR]

We consider risk-averse individuals who differ in two characteristics - ability to benefit from education and inherited wealth - and analyse higher education participation under two alternative financing schemes - tax subsidy and (risk-sharing) income-contingent loans. With decreasing absolute risk aversion, wealthier individuals are more likely to undertake higher education despite the fact that, according to the stylised financing schemes we consider, individuals do not pay any upfront financial cost of education. We then determine which financing scheme arises when individuals are allowed to vote between schemes. We show that the degree of risk aversion plays a crucial role in determining which financing scheme obtains a majority, and that the composition of the support group for each financing scheme can be of two different types. [ABSTRACT FROM AUTHOR]

We conduct a two-stage (DEA and regression) analysis of the efficiency of New Zealand secondary schools. Unlike previous applications of two-stage semi-parametric modelling of the school “production process”, we use Simar and Wilson’s double bootstrap procedure, which permits valid inference in the presence of unknown serial correlation in the efficiency scores. We are therefore able to draw robust conclusions about a system that has undergone extensive reforms with respect to ideas high on the educational agenda such as decentralised school management and parental choice. Most importantly, we find that school type affects school efficiency and so too does teacher quality. [ABSTRACT FROM AUTHOR]

Educational institutions in the Netherlands have some degree of economic independence. Their management decisions are not guided completely by a budget system, but in part also by a market mechanism. Still, budget management is crucial as survival is not primarily determined by the amount of equity capital, but by the annual funding received from the government. For the evaluation of capital management, a capitalization factor is introduced to measure the amount of capital employed by an educational institute in relation to its annual income. It can signal possible inefficiencies reflected in excessive capital assets. Actual budget and capital management is assessed with the help of four financial indicators. There appears to be scope for improvements in financial policies and some recommendations are offered on how to attain them. [ABSTRACT FROM AUTHOR]

We show in this paper that, depending on the initial distribution of material wealth and that of individuals’ abilities, economies converge in the long run towards different proportions of the skilled workforce and different levels of average wealth. We also show that the growth process raises net economic mobility, the long-run proportion of the skilled population and the long-run levels of wealth held by both rich and poor dynasties. Unless the income tax rate is too high, the increase in total public funds is associated, in the long run, with higher net mobility, a larger fraction of the skilled workers and higher levels of wealth of all the dynasties. In addition, the reallocation of public expenditures from basic to advanced education can result in lower mobility, a lower long-run size of the skilled workforce, and a lower long-run level of wealth held by rich dynasties, if the transfer of resources comes at the expense of excessively lowering the quality of education at the basic schooling level. [ABSTRACT FROM AUTHOR]