Financing the future

12 February 2015

The diversity of potential applications suggests that ICLs could well have appeal as a new way to think about the role of government.

The man behind the Higher Education Contribution Scheme (HECS) has played a large part in its success. In this cross-posting from Advance, Professor Bruce Chapman AO tells ANU Reporter that the theory behind HECS can be used in many other settings.

"If you’re below the age of 40 and reading this, there is at least a fair chance that the Higher Education Contribution Scheme has, in some way, been a feature of your life. You may have already paid it off, or be in the process of doing so, or perhaps you just feel like you’ve been saddled with it.

"Whatever your feelings about it – and I say this as the person often blamed and/or credited with the design of HECS – I hope that you feel that the system has at least been fair to you. If you’ve had money, you’ve had to pay it back. If times have been tight, then the amount you repay will be lower.

"HECS was introduced in 1989 by the Australian Government. It is a process in which debts are collected through the tax system depending on the participant’s income. This arrangement is known as an income contingent loan (ICL)."

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