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Taking It to the Limit: Effects of Increased Student Loan Availability on Attainment, Earnings, and Financial Well-Being

Sandra E. Black, Jeffrey T. Denning, Lisa J. Dettling, Sarena Goodman, Lesley J. Turner

NBER Working Paper No. 27658
Issued in August 2020
NBER Program(s):Economics of Education, Labor Studies, Public Economics

Growing reliance on student loans and repayment difficulties have raised concerns of a student debt crisis in the United States. However, little is known about the effects of student borrowing on human capital and long-run financial well-being. We use variation induced by recent expansions in federal loan limits, together with administrative schooling, earnings, and credit records, to identify the effects of increased student borrowing on credit-constrained students’ educational attainment, earnings, debt, and loan repayment. Increased student loan availability raises student debt and improves degree completion, later-life earnings, and student loan repayment while having no effect on homeownership or other types of debt.

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Document Object Identifier (DOI): 10.3386/w27658

 
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