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| Tekijä: | Rothstein, J. Rouse, C.E. |
| Otsikko: | Constrained after college: student loans and early-career occupational choices |
| Lehti: | Journal of Public Economics
2011 : FEB, VOL. 95:1-2, p. 149-163 |
| Asiasana: | students vocational training graduates young people universities aid investment |
| Kieli: | eng |
| Tiivistelmä: | In the early 2000s, a highly selective university implemented a no-loans policy, replacing the loan component of financial aid awards with grants. We use this natural experiment to examine the causal effect of student debt on employment outcomes. In the conventional life-cycle model, young people make optimal educational investment decisions provided that they are able to finance the investments by borrowing against future earnings; debt has only income impacts on investment decisions. Debt is found to cause graduates to pick substantially higher-salary jobs and reduce the probability of students choosing low-paid public interest jobs. Some evidence of debt affecting students' academic decisions during college is also found. The results suggest that recent college graduates are not life-cycle agents. The possible explanations are young workers' credit constraints or their reluctance to hold debt. We find suggestive evidence that debt diminishes students' donations to the institution in the years after graduation and increases the probability of a graduate's default on a pledge made during the senior year; this result is seen consistent more likely with credit constraints than with debt aversion. |
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