Several countries have introduced the student loan systems with income-contingent repayments. For example, in UK Tuition Fee Plan and Maintenance Plan are working, and in Australia there is HECS-HELP. These plans are considered to enhance chance to study for youth with less pressure on national finances, and for this purpose some countries like Japan are considering to introduce such systems. But sometimes financial problems are pointed out on them. For example, UK National Audit Office (NAO) made “Report by the Comptroller and Auditor General, Department for Business, Innovation & Skills, Student loan repayments” on November 2013. It points out the optimistic forecasts on repayments of UK student loan system. The model for appropriate forecast is essential for such student loan system. And appropriate funding for exemptions of repayments, such as due to the threshold of income for repayment, is also important for system stability and right governance. From the actuarial viewpoint, student loan systems with income-contingent repayments can be seen as a kind of public pension systems with advanced payments, or “reverse pensions”. If we stand on this perspective, actuarial knowledges and techniques might be useful for the managements of these systems. I will first mention about existing student loan systems of this type. Next I will make a model student loan plan with income-contingent repayments, and analyse it with actuarial methods. After that, I will consider about the possibility of the contribution of actuaries on this new field.

Find the Q&A here: Q&A on 'Student Loans and Pension Drawdown - Shared Issues?'