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A SECURITISED MARKET FOR HUMAN CAPITAL
Author(s) -
Yu WeiChoun,
Salyards Donald M.
Publication year - 2008
Publication title -
economic affairs
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.24
H-Index - 18
eISSN - 1468-0270
pISSN - 0265-0665
DOI - 10.1111/j.1468-0270.2008.00845.x
Subject(s) - loan , equity (law) , government (linguistics) , finance , business , economics , student loan , equity capital , human capital , fixed income , monetary economics , capital market , market economy , linguistics , philosophy , bond , political science , law
This paper proposes a simple finance innovation with an income‐contingent repayment system to supplement our current fixed‐interest rate student loan system. Income‐contingent repayments could be pooled and securitised while lenders could sell these lifetime equity‐like human capital securities to investors who seek to diversify their existing portfolios. Without increasing the government's fiscal burden, this innovation would significantly reduce entry barriers facing finance‐constrained college students in a continually rising cost environment.