Abstract

http://ssrn.com/abstract=2026990
 


 



A Theory of Inefficient College Entry and Excessive Student Debt


Viktar Fedaseyeu


Bocconi University - Department of Finance; Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research

Vitaliy Strohush


Elon University

August 1, 2016


Abstract:     
When workers are myopic and the amount of financing provided by the government is sufficiently large, some workers acquire education even if they are better off without it. We show that government-provided loans generate a propagation mechanism that exacerbates inefficient college entry. Further, the extent of this inefficiency depends on the speed at which loans are provided, and not just on their amount. The extent of inefficient college entry also depends on the distribution of myopic workers in the population, and inefficiencies can arise even if not all workers are myopic.

Number of Pages in PDF File: 33

Keywords: Student loans, inefficient college entry, excessive student debt, education

JEL Classification: I22, I26, I28


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Date posted: March 24, 2012 ; Last revised: August 6, 2016

Suggested Citation

Fedaseyeu, Viktar and Strohush, Vitaliy, A Theory of Inefficient College Entry and Excessive Student Debt (August 1, 2016). Available at SSRN: http://ssrn.com/abstract=2026990 or http://dx.doi.org/10.2139/ssrn.2026990

Contact Information

Viktar Fedaseyeu (Contact Author)
Bocconi University - Department of Finance ( email )
Via Roentgen 1
Milano, MI 20136
Italy
+390258365283 (Phone)
+390258365283 (Fax)
Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research ( email )
Via Roentgen 1
Milan, 20136
Italy
Vitaliy Strohush
Elon University ( email )
Elon, NC 27244
United States
Feedback to SSRN


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