The Effects of Student Loans on Long-Term Household Financial Stability
AbstractBy examining how student borrowers fare financially after graduation, we attempt to further the existing knowledge of the costs associated with education debt and the manageability of the typical debt burden. We compare the financial stability of individuals who have borrowed for education to similar individuals who have not. We show that, keeping education constant, more student debt is associated with higher probability of being credit constrained and greater likelihood of declaring bankruptcy, particularly for individuals who accumulate debt but do not complete a Bachelor’s degree. We find evidence that homeownership rates may also be affected by education loans. Controlling for earnings tends to strengthen these relationships, which is consistent with omitted variable bias combined with positive return to student loans.
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Bibliographic InfoPaper provided by University of North Carolina at Greensboro, Department of Economics in its series Working Papers with number 14-2.
Length: 28 pages
Date of creation: 28 Feb 2014
Date of revision:
student debt; personal bankruptcy; homeownership;
Find related papers by JEL classification:
- D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
- I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
- I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
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