We will find little evidence that tuition affects student loan borrowing or homeownership for students who did receive Pell Grants

We will find little evidence that tuition affects student loan borrowing or homeownership for students who did receive Pell Grants

We will demonstrate a strong effect of the tuition charged at public 4-year universities on the student loan borrowing and subsequent homeownership only of students who did not receive any Pell Grant aid

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Any correlation between the tuition charged at public universities and state-level economic conditions (through the effect of economic conditions on appropriations) raises a concern about the validity of tuition as an instrument. To address this potential source of bias, we split our sample into treatment and control groups, with the treatment group defined as the individuals who attended a public 4-year university before they turned 23. We then compare the outcomes in the treatment group to those in the control group, which consists of all other individuals (except in specifications shows in col. 7 of Table 4, where the control group is all other individuals with at least some postsecondary education before age 23). Treatment group subjects pay the tuition charged at public 4-year universities, so their total borrowing before turning 23 is directly affected by this tuition. In contrast, the control group is not directly affected by the tuition at public 4-year universities (which they did not attend). Our instrument is therefore the interaction between the tuition charged at public 4-year universities and an indicator for membership in the treatment group. مطالب بیشتر We will find little evidence that tuition affects student loan borrowing or homeownership for students who did receive Pell Grants

Student loan repayment statistics suggest that many student loan borrowers are struggling to repay their student loans

Student loan repayment statistics suggest that many student loan borrowers are struggling to repay their student loans

However, these statistics are attributable mostly to borrowers who drop out of college and not to borrowers who graduate. College dropouts have the debt, but not the degrees that can help them repay the debt. Thus, we don’t have a student loan problem, at least not yet, so much as a college completion problem.

True, the likelihood of default increases as the amount of debt and the debt-to-income ratio increases, but this is not yet the dominant driver of non-performing loans. That’s why the average debt of defaulted borrowers is relatively low. Students who graduate tend to borrow more than students who drop out of college.

But, if current trends continue, average debt at graduation will exceed the average income of college graduates. مطالب بیشتر Student loan repayment statistics suggest that many student loan borrowers are struggling to repay their student loans