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Student Academic Performance, Dropout Decisions and Loan Defaults: Evidence from the Government College Loan Program

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  • Han, Sung min

Abstract

This paper examines the effect of the government college loan program in Korea on student academic performance, dropout decisions and loan defaults. While fairness in educational opportunities has been guaranteed to some degree through this program, which started in 2009, there has been a great deal of controversy over its effectiveness. Empirical findings suggest that recipients of general student loan (GSL) lower academic performance than those who received income contingent loan (ICL). Moreover, for students attending private universities, a higher number of loans received increased the probability of a dropout decision, and students from middle-income households had a higher probability of being overdue than students from low-income households. These findings indicate that expanding the ICL program within the allowance of the government budget is necessary. Furthermore, providing opportunities for students to find various jobs and introducing a rating system for defaulters are two necessary tasks.

Suggested Citation

  • Han, Sung min, 2016. "Student Academic Performance, Dropout Decisions and Loan Defaults: Evidence from the Government College Loan Program," KDI Journal of Economic Policy, Korea Development Institute (KDI), vol. 38(1), pages 71-91.
    • Handle: RePEc:zbw:kdijep:v:38:y:2016:i:1:p:71-91
    DOI: 10.23895/kdijep.2016.38.1.71
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    Cited by:

    1. Keskiner, Hilal & Gür, Bekir S., 2023. "Questioning merit-based scholarships at nonprofit private universities: Lessons from Turkey," International Journal of Educational Development, Elsevier, vol. 97(C).

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    More about this item

    Keywords

    Government College Loan Program; Student Academic Performance; Dropout Decision; Loan Default;
    All these keywords.

    JEL classification:

    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions

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