Connecting Student Loans to Labor Market Outcomes: Policy Lessons from Chile
- (pp. 508-13)
Abstract
Rising student loan default rates and protests over debt suggest that many students make college enrollment and financing choices they regret. Policymakers have considered tying the availability of federally subsidized loans at degree programs to financial outcomes for past students. This paper considers the implementation of such a policy in Chile. We describe how loan repayment varied by degree type at baseline, the design of the loan reform, and how earnings-based loan caps change availability of loans and incentives for students and higher education institutions. We discuss the challenges facing policymakers seeking to link loan availability to earnings outcomes.Citation
Beyer, Harald, Justine Hastings, Christopher Neilson, and Seth Zimmerman. 2015. "Connecting Student Loans to Labor Market Outcomes: Policy Lessons from Chile." American Economic Review, 105 (5): 508-13. DOI: 10.1257/aer.p20151026Additional Materials
JEL Classification
- D14 Household Saving; Personal Finance
- I22 Educational Finance; Financial Aid
- I23 Higher Education; Research Institutions
- I26 Returns to Education
- J31 Wage Level and Structure; Wage Differentials
- O15 Economic Development: Human Resources; Human Development; Income Distribution; Migration