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Assessing the Efficacy of Debt Forgiveness Incentives in Promoting Higher Education Outcomes: Evidence from Colombia's National Student Loan Company

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  • German Pulido

    (UCL Social Research Institute)

Abstract

This paper examines the impact of a debt forgiveness program implemented in 2011 on education and labour market outcomes for student loan holders who pursued university education in Colombia. The policy generated a sharp discontinuity in the eligibility criteria, which I exploit to identify the causal effect of debt forgiveness. Regression discontinuity estimates indicate an increase of 10 percentage points, equivalent to 19.5 percent, in the graduation rate of marginally eligible students. Additionally, the probability of graduating on time (within five years of enrolment) increased by 7.2 percentage points (25.4 percent). There is evidence that the policy had an effect on labour market outcomes. Eight years post-enrolment, eligible students are 19.5 percent more likely to be employed in the formal sector and have higher earnings.

Suggested Citation

  • German Pulido, 2025. "Assessing the Efficacy of Debt Forgiveness Incentives in Promoting Higher Education Outcomes: Evidence from Colombia's National Student Loan Company," CEPEO Working Paper Series 25-02, UCL Centre for Education Policy and Equalising Opportunities, revised Mar 2025.
    • Handle: RePEc:ucl:cepeow:25-02
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    File URL: https://repec-cepeo.ucl.ac.uk/cepeow/cepeowp25-02.pdf
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    References listed on IDEAS

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    6. Hämäläinen, Ulla & Koerselman, Kristian & Uusitalo, Roope, 2017. "Graduation Incentives Through Conditional Student Loan Forgiveness," IZA Discussion Papers 11142, Institute of Labor Economics (IZA).
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    Keywords

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    JEL classification:

    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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