The Returns to College Choice: Loans, Scholarships and Labor Outcomes

Ana Maria Montoya, Carlos Noton and Alex Solis

No 2018:12, Working Paper Series from Uppsala University, Department of Economics

Abstract: To estimate causal eff ects of college choice, we exploit eligibility rules for student loans in a regression discontinuity design. Loan programs induce students to pursue college degrees that are more expensive and prolonged relative to technical education. Although higher education is profi table, the marginal return of college is identical to that of technical education when students are about 30 years old. The college premium seems to increase over time, possibly off setting the initial experience gap and covering cost diff erences under moderate discount rates. We study the eff ects of debt burden on college choice using a similar cutoff rule for scholarships.

Keywords: college choice; credit constraints; returns to college; debt aversion; regression discontinuity (search for similar items in EconPapers)
JEL-codes: I22 I23 I26 I28 J08 (search for similar items in EconPapers)
Pages: 74 pages
Date: 2018-07-31
New Economics Papers: this item is included in nep-edu and nep-lam
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Citations: View citations in EconPapers (1)

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