Labor Market Returns to Student Loans

81 Pages Posted: 18 May 2018 Last revised: 20 May 2020

See all articles by Alonso Bucarey

Alonso Bucarey

Dante Contreras

University of Chile - Department of Economics

Pablo Munoz

University of California, Berkeley - Department of Economics

Date Written: May 4, 2018

Abstract

We study the labor market returns to a State guaranteed loan used to finance university degrees in Chile. Using a regression discontinuity design, we show that marginally eligible students forego vocational education in favor of universities but reduce their probability of graduation. Despite the fact that university loan-takers accumulate more student debt, their labor market outcomes are not different from those of ineligible students. We find suggestive evidence that the lower quality of receiving institutions accounts for these results. Finally, we extrapolate the effects away from the eligibility cutoff and show that supra-marginal students benefit from this policy.

Keywords: financial aid, higher education, student loans, labor market outcomes

JEL Classification: H52, I21, I22, I23, I26, I28, J24, J30

Suggested Citation

Bucarey, Alonso and Contreras, Dante and Munoz, Pablo, Labor Market Returns to Student Loans (May 4, 2018). Available at SSRN: https://ssrn.com/abstract=3173823 or http://dx.doi.org/10.2139/ssrn.3173823

Dante Contreras

University of Chile - Department of Economics ( email )

Diagonal Paraguay 257
Torre 26, Of. 1801
Santiago
Chile

Pablo Munoz (Contact Author)

University of California, Berkeley - Department of Economics ( email )

579 Evans Hall
Berkeley, CA 94709
United States

No contact information is available for Alonso Bucarey

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
98
Abstract Views
514
rank
292,712
PlumX Metrics