Connecting Student Loans to Labor Market Outcomes: Policy Lessons from Chile
Harald Beyer, Justine Hastings, Christopher Neilson, Seth Zimmerman
American Economic Review · 2015 · Volume 105 · Issue 5
Abstract
Rising student loan default rates and protests over debt suggest that many students make college enrollment and financing choices they regret. Policymakers have considered tying the availability of federally subsidized loans at degree programs to financial outcomes for past students. This paper considers the implementation of such a policy in Chile. We describe how loan repayment varied by degree type at baseline, the design of the loan reform, and how earnings-based loan caps change availability of loans and incentives for students and higher education institutions. We discuss the challenges facing policymakers seeking to link loan availability to earnings outcomes.
Keywords
Household Saving, Personal Finance, Educational Finance, Financial Aid, Higher Education, Research Institutions, Returns to Education, Wage Level and Structure, Wage Differentials, Economic Development: Human Resources, Human Development, Income Distribution, Migration
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