Author(s)  
Felicia Ionescu

I quantify the effects of alternative student loan policies on college enrollment, borrowing behavior, and default rates in a heterogeneous model of life-cycle earnings and human capital accumulation. I find that the combination of learning ability and initial stock of human capital drives the decision to enroll in college, while parental wealth has minimal effects on enrollment. Repayment flexibility increases enrollment significantly, whereas relaxation of eligibility requirements has little effect on enrollment or default rates. The former policy benefits low-income households, while the latter has negligible effects on these households

Publication Type  
Article
Journal  
Review of Economic Dynamics
Volume  
12
Issue Number  
1
Pages  
205-231
JEL Codes  
D91: Intertemporal Consumer Choice; Life Cycle Models and Saving
E44: Financial Markets and the Macroeconomy
J24: Human Capital; Skills; Occupational Choice; Labor Productivity
I28: Education: Government Policy