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How risky is college investment?

Lutz Hendricks and Oksana Leukhina ()

No 502, CFS Working Paper Series from Center for Financial Studies (CFS)

Abstract: This paper is motivated by the fact that nearly half of U.S. college students drop out without earning a bachelor's degree. Its objective is to quantify how much uncertainty college entrants face about their graduation outcomes. To do so, we develop a quantitative model of college choice. The innovation is to model in detail how students progress towards a college degree. The model is calibrated using transcript and financial data. We find that more than half of college entrants can predict whether they will graduate with at least 80% probability. As a result, stylized policies that insure students against the financial risks associated with uncertain graduation have little value for the majority of college entrants.

Keywords: Education; College dropout risk (search for similar items in EconPapers)
JEL-codes: E24 J24 I21 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-dge, nep-edu, nep-lma and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/106821/1/817318496.pdf (application/pdf)

Related works:
Journal Article: How Risky is College Investment? (2017) Downloads
Working Paper: How Risky Is College Investment? (2015) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cfswop:502

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