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Educational Debt Burden and Career Choice: Evidence from a Financial Aid Experiment at NYU Law School

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  • Erica Field
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    Abstract

    This paper examines the influence of psychological responses to debt on career choices from an experiment in which alternative financial aid packages were assigned by lottery to a set of law school admits. The packages had equivalent monetary value, but one required the student to take on a loan that would be paid for by the school if he worked in public interest law, while the other covered tuition as long as the student worked in public interest law. If he did not, the student would be required to reimburse the school. Tuition assistance recipients have a 36 to 45 percent higher public interest placement rate and, when lottery results were announced before enrollment, were twice as likely to enroll. (JEL I21, I22, J44, D14)

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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/app.1.1.1
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    Bibliographic Info

    Article provided by American Economic Association in its journal American Economic Journal: Applied Economics.

    Volume (Year): 1 (2009)
    Issue (Month): 1 (January)
    Pages: 1-21

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    Handle: RePEc:aea:aejapp:v:1:y:2009:i:1:p:1-21

    Note: DOI: 10.1257/app.1.1.1
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    Web page: http://www.aeaweb.org/aej-applied
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    Cited by:
    1. Philip Oreopoulos & Kjell G. Salvanes, 2011. "Priceless: The Nonpecuniary Benefits of Schooling," Journal of Economic Perspectives, American Economic Association, vol. 25(1), pages 159-84, Winter.
    2. Gicheva, Dora & Thompson, Jeffrey, 2014. "The Effects of Student Loans on Long-Term Household Financial Stability," Working Papers 14-2, University of North Carolina at Greensboro, Department of Economics.
    3. Juan Esteban Saavedra & Carlos Medina, 2012. "Formación para el Trabajo en Colombia," DOCUMENTOS CEDE 010315, UNIVERSIDAD DE LOS ANDES-CEDE.
    4. David Flacher & Hugo Harari-Kermadec & Léonard Moulin, 2011. "Contributory education scheme : theoretical basis and application," Post-Print hal-00606684, HAL.
    5. Thomas Meissner, 2013. "Intertemporal Consumption and Debt Aversion:An Experimental Study," SFB 649 Discussion Papers SFB649DP2013-045, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
    6. Rothstein, Jesse & Rouse, Cecilia Elena, 2011. "Constrained after college: Student loans and early-career occupational choices," Journal of Public Economics, Elsevier, vol. 95(1), pages 149-163.
    7. David Flacher & Hugo Harari-Kermadec & Léonard Moulin, 2013. "Financing higher education: a contributory scheme," Working Papers 2013/34, Institut d'Economia de Barcelona (IEB).
    8. DesJardins, Stephen L. & McCall, Brian P., 2014. "The impact of the Gates Millennium Scholars Program on college and post-college related choices of high ability, low-income minority students," Economics of Education Review, Elsevier, vol. 38(C), pages 124-138.
    9. Booij, Adam S. & Leuven, Edwin & Oosterbeek, Hessel, 2012. "The role of information in the take-up of student loans," Economics of Education Review, Elsevier, vol. 31(1), pages 33-44.
    10. Bednar, Steven & Gicheva, Dora, 2013. "Tax benefits for graduate education: Incentives for whom?," Economics of Education Review, Elsevier, vol. 36(C), pages 181-197.
    11. Frenette, Marc, 2011. "Is Debt Relief as Good as Liquidity? The Impact of Prospective Student Debt on Post-Secondary Attendance among Low-Income Youth," CLSSRN working papers clsrn_admin-2011-7, Vancouver School of Economics, revised 29 Mar 2011.
    12. Philip Oreopoulos & Kjell G. Salvanes, 2009. "How large are returns to schooling? Hint: Money isn't everything," NBER Working Papers 15339, National Bureau of Economic Research, Inc.
    13. Caetano, Gregorio & Patrinos, Harry A. & Palacios, Miguel, 2011. "Measuring aversion to debt: an experiment among student loan candidates," Policy Research Working Paper Series 5737, The World Bank.
    14. Hugo Harari-Kermadec & David Flacher, 2011. "Tuition fees, self-esteem and social heterogeneity," Post-Print hal-00566151, HAL.
    15. repec:hal:wpaper:hal-00870921 is not listed on IDEAS
    16. repec:hal:cepnwp:hal-00870921 is not listed on IDEAS

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