NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Rajeev Darolia

Truman School of Public Affairs
and College of Education
University of Missouri
216 Middlebush Hall
Columbia, MO 65211

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NBER Working Papers and Publications

December 2016Where Do Students Go when For-Profit Colleges Lose Federal Aid?
with Stephanie R. Cellini, Lesley J. Turner: w22967
Recent policy debates have focused on whether restricting for-profit institutions’ access to federal student financial aid could reduce student loan defaults without restricting prospective students’ access to higher education. We examine the effects of similar restrictions imposed on over 1,200 for-profit colleges in the 1990s. Using variation in the timing and magnitude of sanctions linked to student loan default rates, we estimate the impact of the loss of federal aid on the enrollment of Pell Grant recipients in sanctioned institutions and their local unsanctioned competitors. On average, sanctioned for-profit colleges experience a 40 percent decrease in annual enrollment in the five years following sanction receipt. Enrollment losses due to for-profit sanctions are offset by enrollmen...
 
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