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Borrowing constraints College enrollment and delayed entry Matthew T. Johnson

By: Material type: TextTextSeries: Journal of Labor Economics ; Volume 31 , number 4 ,Chicago: University of Chicago, 2013Content type:
  • text
Media type:
  • unmediated
Carrier type:
  • volume
ISSN:
  • 0734-306
LOC classification:
  • HD5706 JOU
Online resources: Summary: In this article, I propose and estimate a dynamic model of education, borrowing, and work decisions of high school graduates. I examine the effect of relaxing borrowing constraints on educational attainment by simulating increases in the amount students are permitted to borrow from government-sponsored loan programs. My results indicate that borrowing constraints have a small impact on attainment: the removal of education-related borrowing constraints raises bachelor’s degree completion by 2.4 percentage points. Tuition subsidies are necessary to obtain larger increases: I find that higher subsidies for average-ability students are the most cost effective targeted tuition subsidie
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In this article, I propose and estimate a dynamic model of education, borrowing, and work decisions of high school graduates. I examine the effect of relaxing borrowing constraints on educational attainment by simulating increases in the amount students are permitted to borrow from government-sponsored loan programs. My results indicate that borrowing constraints have a small impact on attainment: the removal of education-related borrowing constraints raises bachelor’s degree completion by 2.4 percentage points. Tuition subsidies are necessary to obtain larger increases: I find that higher subsidies for average-ability students are the most cost effective targeted tuition subsidie

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