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The Role of Credit Constraints in the Cyclicality of College Enrolments

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  • Gautam Hazarika

Abstract

Using data from the National Longitudinal Survey of Youth (NLSY), this paper investigates the effect of plausible credit constraints on the cyclicality of teen college enrolments. It is found that teens from wealthier families are more likely to attend college in regional recessions. However, this countercyclical impetus to enrolments is significantly weaker in teens from less wealthy families. The phenomenon is attributed to credit constraints. Teens from families that possess fewer assets to offer lenders as collateral must finance college mainly with part-time earnings and parental subsidies, sums that may dwindle in recessions, making college less affordable. This paper also examines the influence of regional economic conditions on the type of college attended. In particular, it finds no evidence that teens from less wealthy families favor cheaper community colleges in recessions. Also examined are the effects of regional economic conditions at age 18 on college attainment many years hence. It is found that regional economic conditions at 18 have no significant effect on long-term college attainment. Thus, changes in teen enrolment propensities associated with variation in regional economic conditions are merely timing effects.

Suggested Citation

  • Gautam Hazarika, 2002. "The Role of Credit Constraints in the Cyclicality of College Enrolments," Education Economics, Taylor & Francis Journals, vol. 10(2), pages 133-143.
    • Handle: RePEc:taf:edecon:v:10:y:2002:i:2:p:133-143
    DOI: 10.1080/09645290210126887
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    References listed on IDEAS

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    1. Zane Cunska, 2010. "Where is demography leading Latvian higher education?," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 10(1), pages 5-22, June.
    2. Leibing, Andreas, 2026. "Skill Substitution, Expectations, and the Business Cycle," EconStor Preprints 335943, ZBW - Leibniz Information Centre for Economics.
    3. Elizabeth B. Clelan & Michael S. Kofoed, 2017. "The Effect Of The Business Cycle On Freshman Financial Aid," Contemporary Economic Policy, Western Economic Association International, vol. 35(2), pages 253-268, April.
    4. Godstime O. Eigbiremolen & Anthony Orji, 2024. "Credit constraints in higher education attendance: Longitudinal evidence from Ethiopia," African Development Review, African Development Bank, vol. 36(4), pages 555-567, December.
    5. Huang, Jin & Guo, Baorong & Kim, Youngmi & Sherraden, Michael, 2010. "Parental income, assets, borrowing constraints and children's post-secondary education," Children and Youth Services Review, Elsevier, vol. 32(4), pages 585-594, April.
    6. Chapman, Bruce, 2006. "Income Contingent Loans for Higher Education: International Reforms," Handbook of the Economics of Education, in: Erik Hanushek & F. Welch (ed.), Handbook of the Economics of Education, edition 1, volume 2, chapter 25, pages 1435-1503, Elsevier.
    7. Andrea Barigazzi & Claudia Zola, 2025. "Postsecondary Education Attendance and the Business Cycle in Europe. Is the Future of Young Adults Related to the Welfare Regime?," Research in Higher Education, Springer;Association for Institutional Research, vol. 66(7), pages 1-38, November.
    8. Johnson, Matthew T., 2013. "The impact of business cycle fluctuations on graduate school enrollment," Economics of Education Review, Elsevier, vol. 34(C), pages 122-134.

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