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Measuring the Effect of Student Loans onthe College Dropout Rate
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Economics.
2019 (English)Report (Other academic)
Abstract [en]

Most governments around the world offer student loans to help disadvantaged students to enroll in college to reduce the attainment gap between rich and poor. However, we know little about the consequences of these loans. The reduction of the gap depends not only on initial enrollment but also on the dropout rate before graduation. This paper shows how the availability of loans affects the dropout rate in college. Two programs in Chile assign loans based on a cutoff in the national college admission test, enabling a regression discontinuity design. The analysis uses on students who were not induced by the loan to enroll in the first year. I show that access to loans reduces the dropout rate by 25 percentage points and is highly persistent over time (up to the fifth year after initial enrollment). At the cutoff, access to loans allows eliminating the differences in the dropout rate by family income. Finally, I find that students are not sensitive to tuition costs when loans are available.

Place, publisher, year, edition, pages
Uppsala University, 2019. , p. 52
Series
Working paper / Department of Economics, Uppsala University (Online), ISSN 1653-6975 ; 2019:8
National Category
Economics
Research subject
Economics
Identifiers
URN: urn:nbn:se:uu:diva-391965OAI: oai:DiVA.org:uu-391965DiVA, id: diva2:1346049
Available from: 2019-08-27 Created: 2019-08-27 Last updated: 2019-08-28Bibliographically approved

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CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf