scholarly journals Where Do Students Go When For-Profit Colleges Lose Federal Aid?

2020 ◽  
Vol 12 (2) ◽  
pp. 46-83
Author(s):  
Stephanie R. Cellini ◽  
Rajeev Darolia ◽  
Lesley J. Turner
Keyword(s):  
Local Community ◽  
Student Loans ◽  
Student Loan ◽  
Federal Aid ◽  
Level Variation ◽  
Loan Default ◽  
For Profit ◽  
Default Rates ◽  
Student Loan Default ◽  
Percent Decrease

We examine the effects of federal sanctions imposed on for-profit institutions in the 1990s. Using county-level variation in the timing and magnitude of sanctions linked to student loan default rates, we estimate that sanctioned for-profits experience a 68 percent decrease in annual enrollment following sanction receipt. Enrollment losses due to for-profit sanctions are 60–70 percent offset by increased enrollment within local community colleges, where students are less likely to default on federal student loans. Conversely, for-profit sanctions decrease enrollment in local unsanctioned for-profit competitors, likely due to improved information about local options and reputational spillovers. Overall, market enrollment declines by 2 percent. (JEL H52, I21, I22, I23, I28)

Connecting Student Loans to Labor Market Outcomes: Policy Lessons from Chile

2015 ◽  
Vol 105 (5) ◽  
pp. 508-513 ◽  
Author(s):  
Harald Beyer ◽  
Justine Hastings ◽  
Christopher Neilson ◽  
Seth Zimmerman
Keyword(s):  
Student Loans ◽  
Labor Market Outcomes ◽  
Student Loan ◽  
Degree Programs ◽  
Market Outcomes ◽  
Loan Default ◽  
Loan Repayment ◽  
Financial Outcomes ◽  
Default Rates ◽  
Student Loan Default

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.

Messengers of Bad News or Bad Apples? Student Debt and College Accountability

2015 ◽  
Vol 10 (2) ◽  
pp. 277-299 ◽  
Author(s):  
Rajeev Darolia
Keyword(s):  
Low Income ◽  
Student Loan ◽  
Access To Higher Education ◽  
Capital Investments ◽  
Loan Default ◽  
Public And Private ◽  
Loan Repayment ◽  
For Profit ◽  
Student Loan Default ◽  
Public Money

Student loan debt and defaults have been steadily rising, igniting public worry about the associated public and private risks. This has led to controversial regulatory attempts to curb defaults by holding colleges, particularly those in the for-profit sector, increasingly accountable for the student loan repayment behavior of their students. Such efforts endeavor to protect taxpayers against the misuse of public money used to encourage college enrollment and to safeguard students against potentially risky human capital investments. Recent policy proposals penalize colleges for students’ poor repayment performance, raising questions about institutions’ power to influence this behavior. Many of the schools at risk of not meeting student loan default measures also disproportionately enroll low-income, nontraditional, and financially independent students. Policy makers therefore face the challenge of promoting the efficient use of public funds and protecting students while also encouraging access to higher education.

Financialization and the Tyranny of Bootstraps

2020 ◽  
pp. 37-59
Author(s):  
Terri Friedline
Keyword(s):  
Higher Education ◽  
Student Loans ◽  
Student Loan ◽  
Student Loan Debt ◽  
For Profit ◽  
Default Rates ◽  
Loan Debt ◽  
Recent Trends ◽  
The Individual ◽  
Key Terms

This chapter explores recent trends in student loan debt, particularly the for-profit educational corporation Corinthian Colleges’ scandal, in order to define the key terms financialization and neoliberalism. Finance is playing an expanded role in higher education and securitization is being employed to capitalize off of students’ loan debt. Students are increasingly taking on debt and bearing responsibility for a capitalist economy that is stacked against them. Banks and lenders bundle and sell this debt to wealthy, white investors as securities. Given that Black and Brown borrowers take out more student loans, repay their debts plus interest over longer periods of time, and experience higher default rates compared to their white counterparts, these securities are racialized just like the individual lines of debt from which they were created.

Institutional Accountability: A Comparison of the Predictors of Student Loan Repayment and Default Rates

2017 ◽  
Vol 671 (1) ◽  
pp. 202-223 ◽  
Author(s):  
Robert Kelchen ◽  
Amy Y. Li
Keyword(s):  
Minority Group ◽  
State Level ◽  
Student Loan ◽  
Underrepresented Minority ◽  
Loan Default ◽  
Loan Repayment ◽  
First Generation College Student ◽  
For Profit ◽  
Default Rates ◽  
First Generation College

The federal government holds colleges accountable if too many of their students default on loan repayment, but the default measure traditionally used captures only a fraction of students who are struggling to repay their loans. The 2015 College Scorecard dataset introduced a new loan repayment metric, showing that the percentage of students who have not reduced the principal balance of their loans by at least $1 over a given period of time far outstrips the traditional loan default measure. Using a sample of 3,595 colleges, we test the extent to which student demographics, institutional characteristics, and state-level economic factors are associated with repayment rates and default rates. We also examine whether factors associated with loan repayment rates change between one and seven years after students begin repayment. We find that characteristics traditionally associated with economic disadvantage, including being a first-generation college student or a member of an underrepresented minority group, tend to be associated with lower loan repayment rates, as does attendance at for-profit colleges. These factors are just as or more strongly associated with longer-term repayment rates compared to shorter-term repayment rates.

Social Capital’s Impact on College Graduation Rates, Debt, and Student Loan Defaults

2020 ◽  
pp. 152102512091887
Author(s):  
Steve Joanis ◽  
James Burnley ◽  
J. D. Mohundro
Keyword(s):  
Social Capital ◽  
Graduation Rates ◽  
Student Loan ◽  
Theory And Practice ◽  
College Graduation ◽  
Student Debt ◽  
Loan Default ◽  
College Graduation Rates ◽  
Default Rates ◽  
Debt Levels

This study extends the literature on education economics and student retention by examining social capital as a predictor of college graduation rates, student debt levels, and student loan default rates. Coleman’s social capital theory is employed to understand how social influences can impact students through external social support (i.e., social capital). The study uses school-level data from the U.S. Department of Education’s Integrated Postsecondary Education Data System and two social capital measures. Results suggest that social capital, at both the state and the community level, significantly influences graduation rates, student debt levels, and loan default rates. Implications for theory and practice are discussed.

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