Year: 2025
Type: article
Study design: Observational Study
Abstract: This study estimates student loan borrowers’ repayment burdens (RBs) in South Korea. Using data from the Survey Report on Labor Conditions by Employment Type and novel administrative records, we estimate life-cycle earnings profiles by income quantile through RIF regression. These estimates are then used to derive RBs for hypothetical borrowers under income-contingent loans (ICLs) and mortgage-type loans, and to evaluate RBs for actual ICL borrowers by matching them with estimated income profiles. The findings suggest that Korea’s student loan system plays a positive role in expanding access to higher education, particularly through ICLs. Many low-income students who benefited from ICLs are later found in the top income deciles. However, raising the repayment threshold irrespective of borrower income may delay repayment and reduce system efficiency. These results underscore the importance of aligning repayment rules with borrowers’ earnings trajectories to ensure both equity and the long-term sustainability of the loan system.
Source: Sustainability
DOI: 10.3390/su17188118
Authors: JinYeong Kim, Yeogyoung Moon, Chung Choe
Institution: Konkuk University
Language: English
Subfield: Education
Field: Social Sciences
Domain: Social Sciences
Open Access status: gold
Estimated APC paid: $2,896
Funder: Konkuk University
OpenAlex ID: W4414097687