Student Loans and Early Post-Graduation Earnings: Evidence from Decomposition Analysis

43 Pages Posted: 7 Feb 2012

See all articles by Serguey Braguinsky

Serguey Braguinsky

Carnegie Mellon University - Department of Social and Decision Sciences

Atsushi Ohyama

Hokkaido University - Graduate School of Economics & Business Administration

Date Written: February 7, 2012

Abstract

Student loans increase educational opportunities for students from all backgrounds. They have also been criticized as imposing financial and psychological hardships. We employ the data from restricted-use National Surveys of Recent College Graduates to conduct an in-depth investigation of the relationship between student loans and post-graduation labor market outcomes. Graduates with loans have systematically lower earnings than graduates without loans. Decomposition estimations show that most of the earnings differential is due to factors related to the choice and performance in college and unobservables. Student borrowers could benefit from more information about net returns to higher quality education conditional on borrowing.

Keywords: human capital, student loans, earnings differentials, decomposition methods

JEL Classification: I22, J24, J31

Suggested Citation

Braguinsky, Serguey and Ohyama, Atsushi, Student Loans and Early Post-Graduation Earnings: Evidence from Decomposition Analysis (February 7, 2012). Available at SSRN: https://ssrn.com/abstract=2000821 or http://dx.doi.org/10.2139/ssrn.2000821

Serguey Braguinsky (Contact Author)

Carnegie Mellon University - Department of Social and Decision Sciences ( email )

Pittsburgh, PA 15213-3890
United States

Atsushi Ohyama

Hokkaido University - Graduate School of Economics & Business Administration ( email )

Kita-ku Kita 9 Nishi 7
Sapporo, Hokkaido, 060
Japan

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