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The implications of graduate labor market performance in designing a student loan scheme for Malaysia

This chapter examines graduate labor market performance and its implications in the design of a student loan scheme for higher education in Malaysia.The current mortgage-type loan scheme under the National Higher Education Fund Corporation (NHEFC) creates a major problem in terms of loan defaults wh...

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Main Authors: Lim, Hock Eam, Ismail, Russayani, Ibrahim, Yusnidah
Other Authors: Chapman, Bruce
Format: Book Section
Published: Palgrave Macmillan UK 2014
Subjects:
HC Economic History and Conditions
Online Access:http://repo.uum.edu.my/20581/
http://doi.org/10.1057/9781137413208_8
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spelling my.uum.repo.205812017-01-08T08:53:07Z http://repo.uum.edu.my/20581/ The implications of graduate labor market performance in designing a student loan scheme for Malaysia Lim, Hock Eam Ismail, Russayani Ibrahim, Yusnidah HC Economic History and Conditions This chapter examines graduate labor market performance and its implications in the design of a student loan scheme for higher education in Malaysia.The current mortgage-type loan scheme under the National Higher Education Fund Corporation (NHEFC) creates a major problem in terms of loan defaults which contribute to high implicit subsidies and concerns related to the sustainability of this scheme.With high unemployment among fresh graduates and where over-education is found to be prominent among employed graduates, it is likely that the current mortgage-type loan scheme creates a heavy burden on many graduates with relatively low incomes. The important concept relates to what is known as the ‘repayment burden’, the proportion of a debtor’s income that is required to meet repayment obligations. To understand the extent of repayment burdens, age-earnings profiles are estimated for Malaysia and it is found that the earning ability of graduates varies by level and field of study. The current mortgage-type student loans are shown to impose quite high repayment burdens, particularly for graduates in arts and social sciences, with the results helping us to understand the extent of loan defaults. Adjusting the data to include unemployed graduates, which results in a more informed repayment burden calculation, adds very considerably to our assessment of the average repayment difficulties. In assessing the efficacy of the current loan scheme, we compare the implicit subsidies under the current mortgage-type student loans with a proposed (hypothetical) income contingent loan (ICL). Palgrave Macmillan UK Chapman, Bruce Higgins, Timothy Stiglitz, Joseph E. 2014 Book Section PeerReviewed Lim, Hock Eam and Ismail, Russayani and Ibrahim, Yusnidah (2014) The implications of graduate labor market performance in designing a student loan scheme for Malaysia. In: Income Contingent Loans. International Economic Association Series . Palgrave Macmillan UK, pp. 83-97. ISBN 978-1-137-41319-2 http://doi.org/10.1057/9781137413208_8 doi:10.1057/9781137413208_8
institution Universiti Utara Malaysia
building UUM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Utara Malaysia
content_source UUM Institutionali Repository
url_provider http://repo.uum.edu.my/
topic HC Economic History and Conditions
spellingShingle HC Economic History and Conditions
Lim, Hock Eam
Ismail, Russayani
Ibrahim, Yusnidah
The implications of graduate labor market performance in designing a student loan scheme for Malaysia
description This chapter examines graduate labor market performance and its implications in the design of a student loan scheme for higher education in Malaysia.The current mortgage-type loan scheme under the National Higher Education Fund Corporation (NHEFC) creates a major problem in terms of loan defaults which contribute to high implicit subsidies and concerns related to the sustainability of this scheme.With high unemployment among fresh graduates and where over-education is found to be prominent among employed graduates, it is likely that the current mortgage-type loan scheme creates a heavy burden on many graduates with relatively low incomes. The important concept relates to what is known as the ‘repayment burden’, the proportion of a debtor’s income that is required to meet repayment obligations. To understand the extent of repayment burdens, age-earnings profiles are estimated for Malaysia and it is found that the earning ability of graduates varies by level and field of study. The current mortgage-type student loans are shown to impose quite high repayment burdens, particularly for graduates in arts and social sciences, with the results helping us to understand the extent of loan defaults. Adjusting the data to include unemployed graduates, which results in a more informed repayment burden calculation, adds very considerably to our assessment of the average repayment difficulties. In assessing the efficacy of the current loan scheme, we compare the implicit subsidies under the current mortgage-type student loans with a proposed (hypothetical) income contingent loan (ICL).
author2 Chapman, Bruce
author_facet Chapman, Bruce
Lim, Hock Eam
Ismail, Russayani
Ibrahim, Yusnidah
format Book Section
author Lim, Hock Eam
Ismail, Russayani
Ibrahim, Yusnidah
author_sort Lim, Hock Eam
title The implications of graduate labor market performance in designing a student loan scheme for Malaysia
title_short The implications of graduate labor market performance in designing a student loan scheme for Malaysia
title_full The implications of graduate labor market performance in designing a student loan scheme for Malaysia
title_fullStr The implications of graduate labor market performance in designing a student loan scheme for Malaysia
title_full_unstemmed The implications of graduate labor market performance in designing a student loan scheme for Malaysia
title_sort implications of graduate labor market performance in designing a student loan scheme for malaysia
publisher Palgrave Macmillan UK
publishDate 2014
url http://repo.uum.edu.my/20581/
http://doi.org/10.1057/9781137413208_8
_version_ 1644282996433354752
score 13.211869

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