Do for-profit universities induce bad student loans?

John W. Goodell

The Quarterly Review of Economics and Finance, 2016, vol. 61, issue C, 173-184

Abstract: Despite its great social and financial importance, little of the prior empirical research on student-loan default focuses on the role of for-profit universities. This study finds a positive association between student loan default and an institution's for-profit status—even when controlling for previously identified important factors, including graduation rates, the percentage of students who are low-income and from minority groups, and whether the institution is two- or four-year. Overall, my results are consistent with for-profit institutions systematically encouraging ill-advised loans. The results are economically significant, with default rates generally 5–6 percentage points higher for for-profit institutions.

Keywords: Financial aid; Student loans; Access to finance; Default rates; Moral hazard (search for similar items in EconPapers)
JEL-codes: G2 H24 H30 H81 I2 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:quaeco:v:61:y:2016:i:c:p:173-184

DOI: 10.1016/j.qref.2016.02.003

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