Working Paper

Job Loss, Credit Card Loans, and the College-persistence Decision of US Working Students

Abstract: This study assesses the impact of involuntary job loss on college persistence by leveraging different job-loss timings relative to a student’s college enrollment decision. We find that job loss increases the probability that a working college student leaves college before attaining a degree, but access to short-term credit through credit card loans buffers this liquidity effect. By restricting credit supply to college students, the CARD Act of 2009 has inadvertently inhibited the ability of liquidity-constrained students to remain in college when their earnings unexpectedly fall, resulting in a stronger liquidity effect of job loss on college persistence over the last decade.

Keywords: credit card loans; unemployment; college persistence;

JEL Classification: I22; I23; J64;

https://doi.org/10.29412/res.wp.2023.19

Bibliographic Information

Provider: Federal Reserve Bank of Boston

Part of Series: Working Papers

Publication Date: 2023-10-01

Number: 23-19