A Singapore-based private education financing initiative is testing an income-linked repayment model aimed at expanding access to higher education while alleviating the financial burden on graduates. Launched in September by Global Financing of Education (GFE), the Pay It Forward scheme offers students funding for their studies in exchange for committing 3 to 10 percent of their future income for periods ranging from one to ten years.

The model is designed to shift the risk associated with low post-graduation earnings from individual students to the financing pool. Under the scheme, if a graduate’s payments do not reach the initial amount borrowed before the repayment period ends, the financing pool absorbs the shortfall. Conversely, higher earners could contribute more, up to a capped amount. Since May, GFE has disbursed approximately US$25,000 to 11 students, with total funding requests exceeding US$3 million. Eight recipients are pursuing studies overseas, including five in Thailand.

GFE founder Mario Ferro explained that the program evaluates applicants based on financial need, field of study, institution, and anticipated employment outcomes to support “a credible path into work.” Despite typically modest salaries in nursing, the initiative is promoting training in the profession due to strong demand and promising career prospects, Ferro added.

Economists note that GFE’s private-sector approach differs markedly from public income-contingent loan systems, which pool earnings risk across a broader population. Bruce Chapman, the Australian economist who designed his country’s income-contingent loan program, highlighted that private providers have a financial incentive to select candidates likely to generate returns, potentially excluding students entering lower-paying fields. He acknowledged that while private income-linked contracts might assist financially constrained students, they are unlikely to provide a universal solution for higher education financing.

In Indonesia, economist Elza Elmira observed that income-linked financing could fill gaps left by the government’s KIP Kuliah program, which targets students from lower-income households. Elmira suggested that such models might better serve the “missing middle”—households too affluent to qualify for government aid but unable to cover tuition and living costs—by adjusting repayment amounts based on actual earnings, thereby reducing default risk.

Similarly, Malaysia’s economist Geoffrey Williams characterized GFE’s initiative as akin to a privately administered graduate tax but noted its limited scale. Williams cautioned that private schemes would face challenges in expanding to meet the needs of the large student populations that rely on government-backed financing, such as Malaysia’s National Higher Education Fund Corporation (PTPTN).

In the Philippines, public funding primarily supports students through tuition coverage at state universities and targeted subsidies, with a supplementary government loan program that offers short-term financing but requires repayment within 12 months and often a co-signer. Unlike GFE, this arrangement does not link repayment to income, leaving borrowers responsible for financial risk if their employment or earnings fall short.

Overall, experts emphasize that differences in financing models reflect varying assignments of risk—whether it falls on the borrower, the private lender, or the state—with ongoing debate about the most equitable and sustainable approaches to funding higher education.