Measuring the Effect of Student Loans on College Persistence

David Card and Alex Solis ()
Additional contact information
Alex Solis: Department of Economics Visiting Researcher Stockholm School of Economics SE-113 83 Stockholm, Sweden

Education Finance and Policy, 2022, vol. 17, issue 2, 335-366

Abstract: Governments around the world use grant and loan programs to ease the financial constraints that contribute to socioeconomic gaps in college completion. A growing body of research assesses the impact of grants; less is known about how loan programs affect persistence and degree completion. We use detailed administrative data from Chile to provide rigorous regression discontinuity-based evidence on the impacts of loan eligibility for university students who retake the national admission test after their first year of studies. Those who score above a certain threshold become eligible for loans covering around 85 percent of tuition costs for the duration of their program. We find that access to loans increases by 20 percentage points the fraction who return to university for a second year, with two thirds of the effect arising from a reduction in transfers to vocational colleges and one third from a decline in the share who stop postsecondary schooling altogether. The longer-run impacts are smaller but remain highly significant, with a 12 percentage point impact on the fraction of marginally eligible retakers who complete a bachelor's degree.

Date: 2022
References: Add references at CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
https://doi.org/10.1162/edfp_a_00342
Access to PDF is restricted to subscribers.

Related works:
Working Paper: Measuring the Effect of Student Loans on College Persistence (2020)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:tpr:edfpol:v:17:y:2022:i:2:p:335-366

Ordering information: This journal article can be ordered from
https://mitpressjour ... rnal/?issn=1557-3060

Access Statistics for this article

Education Finance and Policy is currently edited by Stephanie Riegg Cellini and Randall Reback

More articles in Education Finance and Policy from MIT Press
Bibliographic data for series maintained by The MIT Press ().