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Author: Ersoy, Fulya
Resulting in 1 citation.
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Ersoy, Fulya |
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Medium-Run Effects of Student Loans on Debt Holdings Working Paper, Department of Economics, Loyola Marymount University, October 31, 2018. Also: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3277101 Cohort(s): NLSY97 Publisher: Social Science Electronic Publishing, Inc. Keyword(s): Debt/Borrowing; Student Loans / Student Aid Permission to reprint the abstract has not been received from the publisher. Both student loans and household debt are at their peaks. This paper investigates whether and how student loans causally impact debt holdings of individuals in the medium run using data from NLSY97. To identify the causal effect of student loans on future debt holdings, I instrument the amount of student loan debt with eligibility for merit grants where the first stage involves a triple differences estimation. I find that student loans mechanically increase debt holdings at age 25 and non-mechanically decrease debt holdings at age 30 by reducing credit card debt (but not house or vehicle debt). I explore potential explanations for this non-mechanical decrease. I find that student loans positively impact the educational outcomes of students, but do not increase their risk aversion or impact their mental well-being. Furthermore, the effects are driven by individuals from poorer families. These results suggest that individuals reduce their borrowing (at least partially) because of education and credit constraint channels, but not because they become more averse to debt. |
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Bibliography Citation
Ersoy, Fulya. "Medium-Run Effects of Student Loans on Debt Holdings." Working Paper, Department of Economics, Loyola Marymount University, October 31, 2018. |