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Effects of college educational debt on graduate school attendance and early career and lifestyle choices

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  • Lei Zhang

Abstract

This paper examines how college educational debt affects various post-baccalaureate decisions of bachelor’s degree recipients. I employ the Baccalaureate and Beyond 93/97 survey data. Using college-aid policies as instrumental variables to correct for the endogeneity of student college debt level, I find that for public college graduates, college debt has a negative and significant effect on graduate school attendance. This negative effect is concentrated on more costly programs associated with doctoral, MBA, and first professional (FP) degrees, and debt has no effect on the choice of a master’s program. For private college students, debt does not have an effect on the overall graduate school attendance, but this absence of effect conceals the differential effects of debt on different graduate programs -- debt has a positive and significant effect on the choice of an MBA or an FP program, and a zero effect on other programs. For both public and private college students, debt has no effects on early career choices such as salary, sector of occupation, marital status, and homeownership.

Suggested Citation

  • Lei Zhang, 2013. "Effects of college educational debt on graduate school attendance and early career and lifestyle choices," Education Economics, Taylor & Francis Journals, vol. 21(2), pages 154-175, March.
    • Handle: RePEc:taf:edecon:v:21:y:2013:i:2:p:154-175
    DOI: 10.1080/09645292.2010.545204
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    1. Davidson, Russell & MacKinnon, James G., 1993. "Estimation and Inference in Econometrics," OUP Catalogue, Oxford University Press, number 9780195060119, Decembrie.
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    Cited by:

    1. Marco Di Maggio & Ankit Kalda & Vincent Yao, 2019. "Second Chance: Life without Student Debt," NBER Working Papers 25810, National Bureau of Economic Research, Inc.
    2. Ji, Yan, 2021. "Job Search under Debt: Aggregate Implications of Student Loans," Journal of Monetary Economics, Elsevier, vol. 117(C), pages 741-759.
    3. Jinhee Kim & Swarn Chatterjee, 2019. "Student Loans, Health, and Life Satisfaction of US Households: Evidence from a Panel Study," Journal of Family and Economic Issues, Springer, vol. 40(1), pages 36-50, March.
    4. Robin Henager & Sophia T. Anong & Joyce Serido & Soyeon Shim, 2021. "Does Financial Satisfaction Vary Depending on the Funding Strategy Used to Pay for College?," Journal of Family and Economic Issues, Springer, vol. 42(3), pages 429-448, September.
    5. Ali Ait Si Mhamed & Rita Kaša, 2010. "Comparing tertiary graduates with and without student loans in Latvia," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 10(2), pages 49-62, December.
    6. Paolo Guasoni & Yu-Jui Huang, 2022. "Minimizing the Repayment Cost of Federal Student Loans," Papers 2207.03438, arXiv.org.
    7. Thomas Korankye & Charlene M. Kalenkoski, 2021. "The Effect of Households’ Student Debt on Life Satisfaction," Journal of Family and Economic Issues, Springer, vol. 42(4), pages 757-772, December.
    8. Welch, Jilleah G., 2014. "HOPE for community college students: The impact of merit aid on persistence, graduation, and earnings," Economics of Education Review, Elsevier, vol. 43(C), pages 1-20.
    9. repec:cep:sticar:case/96 is not listed on IDEAS
    10. Cooper, Kerris & Stewart, Kitty, 2015. "Does money in adulthood affect adult outcomes?," LSE Research Online Documents on Economics 121477, London School of Economics and Political Science, LSE Library.
    11. Rong Chen & Peter Riley Bahr, 2021. "How Does Undergraduate Debt Affect Graduate School Application and Enrollment?," Research in Higher Education, Springer;Association for Institutional Research, vol. 62(4), pages 528-555, June.

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