The Federal Student Loan Program: Quantitative Implications for College Enrollment and Default Rates

Felicia Ionescu ()

No 2007-04, Working Papers from Department of Economics, Colgate University

Abstract: I quantify the effects of alternative student loan policies on college enrollment, bor- rowing behavior, and default rates in a heterogeneous model of life-cycle earnings and human capital accumulation. I find that the combination of learning ability and initial human capital stock drives the decision to enroll in college while parental wealth has minimal effects on enrollment. Repayment flexibility increases enrollment significantly, whereas relaxation of eligibility requirements has little effect on enrollment or default rates. The former policy induces substantial welfare gains for bottom income quantiles, while the latter implies minimal welfare gains for bottom income quantiles.

Keywords: Student loans; Human capital; Default (search for similar items in EconPapers)
JEL-codes: D91 E44 I28 J24 (search for similar items in EconPapers)
Date: 2008-06
New Economics Papers: this item is included in nep-dge, nep-edu and nep-mac
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Citations: View citations in EconPapers (3)

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Related works:
Journal Article: The Federal Student Loan Program: Quantitative Implications for College Enrollment and Default Rates (2009)
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