Educational loans and attitudes towards risk

Sarah Brown (), Aurora Ortiz-Núñez () and Karl Taylor
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Aurora Ortiz-Núñez: Department of Economics, The University of Sheffield
Authors registered in the RePEc Author Service: Aurora Ortiz Nunez

No 2011010, Working Papers from The University of Sheffield, Department of Economics

Abstract: We explore the relationship between willingness to take financial risk and the probability of taking out a loan for educational purposes as well as the influence of risk attitudes on the size of the loan using data drawn from the U.S. Survey of Consumer Finances. The findings suggest a positive relationship between individuals’ willingness to take financial risk and the probability of taking out a loan for educational purposes. Similarly, individuals’ willingness to take financial risk appears to be an important determinant of the size of the educational loan. The findings suggest that non-white individuals and individuals from less wealthy backgrounds are less likely to finance education through loans which could potentially increase inequalities in education and income if such individuals are deterred from investing in human capital.

Keywords: Educational loan; Risk aversion (search for similar items in EconPapers)
JEL-codes: I22 I23 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2011-04, Revised 2011-04
New Economics Papers: this item is included in nep-edu and nep-lab
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:shf:wpaper:2011010

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