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Image: Shutterstock.com

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Funding the education architecture

8 July 2019

4 minute read

2019 07 09

Paulo Nascimento | Photo: Keiny Andrade / Folha Pess

With his research concentrated on modelling and designing Income Contingent Loans in higher education and beyond, Paulo Nascimento shares his insight on funding the education architecture. A Research Officer at the Brazilian Institute for Applied Economic Research, Paulo discusses how Australia began a revolution in higher education financing and the key ways to boost Brazilian investments in education. 

Q. Addressing higher education financing has significantly grown in prominence over the past few years. How vital is this issue for a developing economy such as Brazil?

Brazil is a country of continental dimensions, with a population almost ten times greater than that of Australia and with great potential in several areas. However, there is still a very large gap in human capital formation. For example, only 15% of the Brazilian adult population has a university degree (45% in Australia).

Being a middle-income country, it becomes a key issue to address the much-needed investment in education in the best possible way. It is not possible to only count on public sources of financing for an expansion of a high quality education system. Private investment needs to be greater, especially since the salary premium for graduates in Brazil is the highest among countries monitored annually in Organisation for Economic Co-operation and Development (OECD) reports. The solution, therefore, is to establish a financing architecture that has the appropriate incentives to boost private investment in order to complement public financing in higher education. Income Contingent Loans (ICL) are an excellent tool for this.

Q. Your research primarily focuses on the policy debates on higher education financing, particularly in Brazil. However, how do you perceive the overall policy impacts in your field of research?

I see that, as technology advances, the adoption of ICL-based student financing systems has become more viable all over the world, including for developing countries. As technology enables governments to identify a citizen’s ability to pay, and efficiently collect, income-based payments. The consolidation of ICL systems in Australia and England reinforce the perception that this form of student financing is effective, efficient and fair.

The more ICL systems spread around the world, the more their viability has proven to be. Accordingly, there are more examples available to researchers and policy makers to examine and implement this method.

Australia has begun a revolution that will go far beyond the funding of higher education students.

Q. What is your assessment of Australia with respect to its efforts towards higher education financing?

Australia is an international benchmark in higher education student financing. The success of Higher Education Contribution Scheme (HECS) has made the country the pioneer in an innovation, which is still in the early stages of global impact. I believe that Australia has begun a revolution that will go far beyond the funding of higher education students. I share the view of those who perceive the ICLs as a social innovation that, at the very least, will change the way governments finance access to public goods. Congratulations to Australia, ANU and Professor Bruce Chapman for pioneering this.

Q. You had recently conducted research at the ANU College of Business and Economics. In what ways has, your experience at ANU influenced your research?

My experience at ANU has put my research work on another level. The guidance of Professors Bruce Chapman and Dr Tim Higgins and the opportunity to participate in a network of researchers along with Lorraine Dearden from the UCL Institute of Education, Susan Dynarski from the University of Michigan and Dung Doan from ANU really made the difference. 

Paulo Nascimento and a team of ANU academics will be participating in a conference in Brazil on Income Contingent Loans from 10-12 July 2019.

Click here to read more about Income Contingent Loans.

Updated:   11 February 2020 / Responsible Officer:  CBE Communications and Outreach / Page Contact:  College Web Team