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Title: An Option for Financial Aid

Citation Type: Miscellaneous

Publication Year: 2008

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Abstract: The variety of financing plans for higher education now includes income contingent repayment plans, pre-paid tuition plans, savings plan trusts, and state college savings bonds. None of these plans hedge against the uncertainty of gaining human capital by investing in a college education. I investigate using a European call option, with income as the underlying asset, to hedge the risk of gaining human capital by investing in a college education. I also discuss how the option can be used to increase access to higher education for minority and disadvantaged groups.

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Authors: Sharpe, Rhonda V.

Publisher: Clemson University

Data Collections: IPUMS USA

Topics: Education

Countries: United States