The Impact of Student Debt on High Value Entrepreneurship and Venture Success: Evidence from No-Loans Financial Aid Policies
46 Pages Posted: 25 Sep 2018 Last revised: 18 Oct 2018
Date Written: October 14, 2018
We find that graduates from universities that remove student loans from their financial aid policies are more likely to start entrepreneurial ventures and are more likely to subsequently get venture capital (VC) backing, particularly by reputed VCs, and get higher VC investment. Such ventures have higher sales and employment five years after founding. Our results are stronger for universities with higher tuition and greater extent of R&D activity. Overall, our results document a significant adverse effect of student loans on a crucial engine of economic growth - high impact, venture capital backed startups.
Keywords: entrepreneurship, venture capital, student debt, financial aid policy
Suggested Citation: Suggested Citation