Evidence on Credit Constraints, University Attendance and Income Contingent Loans

41 Pages Posted: 9 Dec 2014

See all articles by Buly A. Cardak

Buly A. Cardak

La Trobe University - School of Economics

Chris Ryan

University of Melbourne

Date Written: November 2014

Abstract

The effects of credit constraints on university participation are investigated in a setting where income contingent tuition loans are available to students. Students most likely to face credit constraints have the same or higher probability of attending university as all other students, given their high school achievement. A novel approach to handle potential bias arising from unobserved heterogeneity is proposed. An estimate of unobservable heterogeneity based on post-secondary plans reported during ninth grade is constructed. This estimate is found to explain university attendance but does not overturn results regarding the effects of credit constraints.

Keywords: University participation, credit constraints, unobservables

JEL Classification: I21, I22, I28

Suggested Citation

Cardak, Buly and Ryan, Chris, Evidence on Credit Constraints, University Attendance and Income Contingent Loans (November 2014). Melbourne Institute Working Paper No. 24/14, Available at SSRN: https://ssrn.com/abstract=2532763 or http://dx.doi.org/10.2139/ssrn.2532763

Buly Cardak

La Trobe University - School of Economics ( email )

Bundoora
Bundoora, Victoria 3083 3086
Australia
+61 3 9479 3419 (Phone)
+61 3 9479 1654 (Fax)

Chris Ryan (Contact Author)

University of Melbourne ( email )

185 Pelham Street
Carlton, Victoria 3053
Australia

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