Assessing the Efficacy of Debt Forgiveness Incentives in Promoting Higher Education Outcomes: Evidence from Colombia's National Student Loan Company

German Pulido ()
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German Pulido: UCL Social Research Institute

No 25-02, CEPEO Working Paper Series from UCL Centre for Education Policy and Equalising Opportunities

Abstract: This paper examines the impact of a debt forgiveness program implemented in 2011 on education and labour market outcomes for student loan holders who pursued university education in Colombia. The policy generated a sharp discontinuity in the eligibility criteria, which I exploit to identify the causal effect of debt forgiveness. Regression discontinuity estimates indicate an increase of 10 percentage points, equivalent to 19.5 percent, in the graduation rate of marginally eligible students. Additionally, the probability of graduating on time (within five years of enrolment) increased by 7.2 percentage points (25.4 percent). There is evidence that the policy had an effect on labour market outcomes. Eight years post-enrolment, eligible students are 19.5 percent more likely to be employed in the formal sector and have higher earnings.

Keywords: student loans; higher education; debt relief; financial aid; graduation; employment (search for similar items in EconPapers)
JEL-codes: I22 I23 I28 J21 J31 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2025-03, Revised 2025-03
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https://repec-cepeo.ucl.ac.uk/cepeow/cepeowp25-02.pdf First version, 2025 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:ucl:cepeow:25-02

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