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Evidence on Credit Constraints, University Attendance and Income Contingent Loans

Author

Listed:
  • Buly A. Cardak

    (School of Economics, La Trobe University)

  • Chris Ryan

    (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)

Abstract

The effects of credit constraints on university participation are investigated in a setting where income contingent tuition loans are available to students. Students most likely to face credit constraints have the same or higher probability of attending university as all other students, given their high school achievement. A novel approach to handle potential bias arising from unobserved heterogeneity is proposed. An estimate of unobservable heterogeneity based on post-secondary plans reported during ninth grade is constructed. This estimate is found to explain university attendance but does not overturn results regarding the effects of credit constraints.

Suggested Citation

  • Buly A. Cardak & Chris Ryan, 2014. "Evidence on Credit Constraints, University Attendance and Income Contingent Loans," Melbourne Institute Working Paper Series wp2014n24, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    • Handle: RePEc:iae:iaewps:wp2014n24
    as

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    File URL: http://melbourneinstitute.unimelb.edu.au/downloads/working_paper_series/wp2014n24.pdf
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    References listed on IDEAS

    as
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    5. Buly A. Cardak & Joe Vecci, 2016. "Graduates, Dropouts and Slow Finishers: The Effects of Credit Constraints on University Outcomes," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 78(3), pages 323-346, June.
    6. Ralph Stinebrickner & Todd Stinebrickner, 2008. "The Effect of Credit Constraints on the College Drop-Out Decision: A Direct Approach Using a New Panel Study," American Economic Review, American Economic Association, vol. 98(5), pages 2163-2184, December.
    7. Philippe Belley & Lance Lochner, 2007. "The Changing Role of Family Income and Ability in Determining Educational Achievement," Journal of Human Capital, University of Chicago Press, vol. 1(1), pages 37-89.
    8. Chapman, Bruce, 1997. "Conceptual Issues and the Australian Experience with Income Contingent Charges for Higher Education," Economic Journal, Royal Economic Society, vol. 107(442), pages 738-751, May.
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    Cited by:

    1. Jeff Borland & Michael Coelli, 2016. "Labour Market Inequality in Australia," The Economic Record, The Economic Society of Australia, vol. 92(299), pages 517-547, December.
    2. Buly A. Cardak & Joe Vecci, 2016. "Graduates, Dropouts and Slow Finishers: The Effects of Credit Constraints on University Outcomes," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 78(3), pages 323-346, June.

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    More about this item

    Keywords

    University participation; credit constraints; unobservables;
    All these keywords.

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy

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