Life after Debt: Post-Graduation Consequences of Federal Student Loans

Nicolas Ziebarth and Martin Gervais

No 238, 2017 Meeting Papers from Society for Economic Dynamics

Abstract: We estimate the causal effect of student loans on post-graduation outcomes exploiting a kink in the formula determining the eligibility for need-based federal student loans. Using a nationally representative sample of students graduating with a bachelor's degree in 1993, we establish that student debt leads to lower earnings soon after graduation, an effect which dissipates over time. Surprisingly, the negative effect on earnings is driven by a decline in hours worked rather than the wage rate. Students with debt tend to be less ``choosy'' on the job market: they are more inclined to accept part-time jobs as well as jobs that are less related to their degree and offer limited career potential.

Date: 2017
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Related works:
Journal Article: LIFE AFTER DEBT: POSTGRADUATION CONSEQUENCES OF FEDERAL STUDENT LOANS (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed017:238

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