In other words, ICLs provide a mixture of consumption-smoothing benefits and insurance against the uncertain outcomes of risky educational investments. As the name suggests, in risk-pooling ICLs, default risk is assumed by the cohort of borrowers ex post, while the public sector takes on the default risk in risk-sharing ICLs. Graduate taxes involve paying a certain fraction of future incomes for an agreed period of time regardless of the amount borrowed, making it a very progressive debt collection mechanism. Human capital contracts are private contracts in a form very similar to graduate taxes.