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The Returns to College Choice: Loans, Scholarships and Labor Outcomes

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  • Montoya, Ana Maria

    (Department of Industrial Engineering, University of Chile)

  • Noton, Carlos

    (Department of Industrial Engineering, University of Chile)

  • Solis, Alex

    (Department of Economics)

Abstract

To estimate causal eff ects of college choice, we exploit eligibility rules for student loans in a regression discontinuity design. Loan programs induce students to pursue college degrees that are more expensive and prolonged relative to technical education. Although higher education is profi table, the marginal return of college is identical to that of technical education when students are about 30 years old. The college premium seems to increase over time, possibly off setting the initial experience gap and covering cost diff erences under moderate discount rates. We study the eff ects of debt burden on college choice using a similar cutoff rule for scholarships.

Suggested Citation

  • Montoya, Ana Maria & Noton, Carlos & Solis, Alex, 2018. "The Returns to College Choice: Loans, Scholarships and Labor Outcomes," Working Paper Series 2018:12, Uppsala University, Department of Economics.
    • Handle: RePEc:hhs:uunewp:2018_012
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    Cited by:

    1. David Card & Alex Solis, 2022. "Measuring the Effect of Student Loans on College Persistence," Education Finance and Policy, MIT Press, vol. 17(2), pages 335-366, Spring.

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    More about this item

    Keywords

    college choice; credit constraints; returns to college; debt aversion; regression discontinuity;
    All these keywords.

    JEL classification:

    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies

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