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Student Loans: Liquidity Constraint and Higher Education in South AfricaMarc GurgandNational Center for Scientific Research (CNRS); National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST) Adrien J.S. Lorenceauaffiliation not provided to SSRN Thomas Mélonioaffiliation not provided to SSRN September 7, 2011 Agence Française de Développement Working Paper No. 117 Abstract: Empirical evidence that access to higher education is constrained by credit availability is limited and usually indirect. This paper provides direct evidence by comparing university enrollment rates of potential South African students, depending on whether or not they get a loan to cover their university fees, in a context where such fees are high. We use matched individual data from a credit institution (Eduloan) and from the Department of Education. Using a regression-discontinuity design based on the fact that loans are granted according to a credit score threshold, we can estimate the causal impact of loan obtainment. We find that the credit constraint is substantial, as it reduces the enrollment rate into higher education by more than 20 percentage points in a population of student loan applicants.
Number of Pages in PDF File: 48 Keywords: education, credit, South Africa, EduLoan, AFD, higher education JEL Classification: I22 working papers seriesDate posted: December 8, 2011 ; Last revised: December 18, 2011Suggested CitationContact Information
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