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The Distribution of College Graduate Debt, 1990 to 2008: A Decomposition Approach

Despite tremendous recent interest in the subject of student debt by both researchers and policymakers, little is known about how the distribution of college graduate debt has been evolving and what factors can explain it. We use National Postsecondary Student Aid Study data from 1990 through 2008 to document the evolution of college graduate debt profiles. We find that growth in debt over the 1990s was rapid and occurred throughout the distribution; during the 2000s, in contrast, debt grew appreciably only for the top quartile. Employing several decomposition techniques, we exploit the richness of the data to explain these shifts. Over the entire horizon, observable characteristics of students and institutions explain about one-third of the debt increase, though this share tends to be higher around the extensive margin and the median and lower in the right tail. While observables -- largely costs -- explain a majority of the increase between 1990 and 1996 and again from 2000 to 2008, they explain nothing over the late 1990s. We offer suggestive evidence that this "unobservable" share was supply-side driven, owing to the advent of both federal unsubsidized Stafford loans and private loans.

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Paper provided by W.E. Upjohn Institute for Employment Research in its series Upjohn Working Papers and Journal Articles with number 14-204.

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Date of creation: Nov 2013
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Handle: RePEc:upj:weupjo:14-204
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  1. Stephanie Riegg Cellini & Claudia Goldin, 2012. "Does Federal Student Aid Raise Tuition? New Evidence on For-Profit Colleges," NBER Working Papers 17827, National Bureau of Economic Research, Inc.
  2. John Bound & Michael F. Lovenheim & Sarah Turner, 2010. "Increasing Time to Baccalaureate Degree in the United States," NBER Working Papers 15892, National Bureau of Economic Research, Inc.
  3. Ronald Oaxaca, 1971. "Male-Female Wage Differentials in Urban Labor Markets," Working Papers 396, Princeton University, Department of Economics, Industrial Relations Section..
  4. Brian Jacob & Brian McCall & Kevin M. Stange, 2013. "College as Country Club: Do Colleges Cater to Students' Preferences for Consumption?," NBER Working Papers 18745, National Bureau of Economic Research, Inc.
  5. Christopher Avery & Sarah Turner, 2012. "Student Loans: Do College Students Borrow Too Much--Or Not Enough?," Journal of Economic Perspectives, American Economic Association, vol. 26(1), pages 165-92, Winter.
  6. Sergio Firpo & Nicole M. Fortin & Thomas Lemieux, 2009. "Unconditional Quantile Regressions," Econometrica, Econometric Society, vol. 77(3), pages 953-973, 05.
  7. Susan Dynarski & Judith Scott-Clayton, 2013. "Financial Aid Policy: Lessons from Research," NBER Working Papers 18710, National Bureau of Economic Research, Inc.
  8. Ben Jann, 2008. "The Blinder–Oaxaca decomposition for linear regression models," Stata Journal, StataCorp LP, vol. 8(4), pages 453-479, December.
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