Working Paper: NBER ID: w27658
Authors: Sandra E. Black; Jeffrey T. Denning; Lisa J. Dettling; Sarena Goodman; Lesley J. Turner
Abstract: Growing reliance on student loans and repayment difficulties have raised concerns of a student debt crisis in the United States, but little is known about the effects of student borrowing on human capital and long‐run financial well‐being. We use variation induced by recent expansions in federal loan limits combined with administrative datasets to identify the effects of increased access to student loans on credit‐constrained students’ educational attainment, earnings, debt, and loan repayment. Increased student loan availability raises student debt and improves degree completion, later‐life earnings, and student loan repayment while having no effect on homeownership or other types of debt.
Keywords: student loans; educational attainment; financial well-being; credit constraints
JEL Codes: D14; H52; H81; I21; I22; I23; I26; I28; J24
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Increased student loan availability (H81) | Increased student debt (H74) |
| Increased student loan availability (H81) | Improved educational attainment (I24) |
| Increased student loan availability (H81) | Increased earnings ten years post-college (D29) |
| Increased student loan availability (H81) | Improved loan repayment behavior (G51) |
| Increased student loan availability (H81) | No negative spillovers to other credit markets (E44) |
| Increased student loan availability (H81) | Human capital gains outweigh burdens of higher debt levels (G51) |