first making such arrangements universally available would be prohibitively expensive as the default risk is assumed by the public sector rationing such loans on the basis of meanstested parental resources is a solution but it raises difficulties for students that do not have access to either these loans or the resources of their welloff families second as the repayment of such loans does not take into account the future capacity of borrowers some riskaverse students would be unwilling to undertake these loans especially if defaulting is costly third graduates facing high loan repayment obligations would be more likely to choose careers with high earnings rather than lowpaying but socially productive ones the defining characteristic of icl schemes is that the collection of debt is tied to the borrowers future capacity to pay repayments are not required in periods of low income ensuring that borrowers are able to meet their repayment obligations and to smooth their consumption across periods of high and low income