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Connecting student loans to labor market outcomes: Policy lessons from Chile

Author(s): Beyer, Harald; Hastings, Justine; Neilson, Christopher A.; Zimmerman, Seth

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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.
Publication Date: May-2015
Citation: Beyer, H, Hastings, J, Neilson, C, Zimmerman, S. (2015). Connecting student loans to labor market outcomes: Policy lessons from Chile. American Economic Review, 105 (5), 508 - 513. doi:10.1257/aer.p20151026
DOI: doi:10.1257/aer.p20151026
ISSN: 0002-8282
Pages: 508 - 513
Type of Material: Journal Article
Journal/Proceeding Title: American Economic Review
Version: Final published version. Article is made available in OAR by the publisher's permission or policy.

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