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The Federal Student Loan Program: Quantitative Implications for College Enrollment and Default Rates

  • Felicia Ionescu

    (Colgate University)

I quantify the effects of alternative student loan policies on college enrollment, borrowing behavior, and default rates in a heterogeneous model of life-cycle earnings and human capital accumulation. I find that the combination of learning ability and initial stock of human capital drives the decision to enroll in college, while parental wealth has minimal effects on enrollment. Repayment flexibility increases enrollment significantly, whereas relaxation of eligibility requirements has little effect on enrollment or default rates. The former policy benefits low-income households, while the latter has negligible effects on these households. (Copyright: Elsevier)

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File URL: http://dx.doi.org/10.1016/j.red.2008.09.004
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Article provided by Elsevier for the Society for Economic Dynamics in its journal Review of Economic Dynamics.

Volume (Year): 12 (2009)
Issue (Month): 1 (January)
Pages: 205-231

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Handle: RePEc:red:issued:07-196
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Marina Azzimonti, Department of Economics, Stonybrook University, 10 Nicolls Road, Stonybrook NY 11790 USA

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