According to Friedman this proposal to finance higher education is like equity not loan where government provides financial assistance to pay for colleges or universities and in return the student would pay a percentage of their income to the government regardless to the amount initially invested for students. Under ICL, the low income student will not pay the full amount this means socializes loss but the higher income will pay the full loan and then continue to personally reap the dividends, of the initial loan this given privatize gain. Therefore, the inequalities of access of higher education can be controlled using ICL. Friedman believes that ICL is appropriate way of financing education because market is imperfect, higher ROR to investment in training than in capital, fixed money loans are BAD because students who need capital tend to lack collateral to guarantee the loan and we can’t have slaves, allows individuals to reap the benefits of education and increases the choice aspect, reduces the costs of investing in higher education (Chapman, and Bruce. 2006), and increases the attractiveness of positive social careers and is an attractive borrowing mechanism for students (Chapman, and Bruce. 2006).
The ICL plan, or “pay as you earn” plan, according to Friedman has the potential to make higher schools effect, to avoid government’s overinvestment and indiscrimination finances, and to foster an equal competition environment for both schools and individuals.