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Diplomas to Doorsteps: Education, Student Debt, and Homeownership
Evidence overwhelmingly shows that the average earnings premium to having a college education is high and has risen over the past several decades, in part because of a decline in real average earnings for those without a college degree. In addition to high private returns, there are substantial social returns to having a well-educated citizenry and workforce. A new development that may have important longer-term implications for education investment and for the broader economy is a significant change in the financing of higher education. State funding has declined markedly over the past two ...
Credit Access and Mobility during the Flint Water Crisis
How do credit-constrained communities cope with the financial consequences of environmental crises? Beginning in April 2014, the residents of Flint, Michigan, were exposed to lead-contaminated water resulting from a series of governmental missteps. In this paper, we use the spatial distribution of lead and galvanized pipes in Flint to study the effect of the crisis on households’ financial health, including loan balances, repayment of outstanding debt, and Equifax Risk Scores, as well as on household mobility. We find that relatively more affected households, as measured by exposure to lead ...
Who is More Likely to Default on Student Loans?
This post seeks to understand how educational characteristics (school type and selectivity, graduation status, major) and family background relate to the incidence of student loan default. Student indebtedness has grown substantially, increasing by 170 percent between 2006 and 2016. In addition, the fraction of students who default on those loans has grown considerably. Of students who left college in 2010 and 2011, 28 percent defaulted on their student loans within five years, compared with 19 percent of those who left school in 2005 and 2006. Since defaulting on student loans can have ...
Why New York City Subway Delays Don't Affect All Riders Equally
The state of the New York City subway system has worsened considerably over the past few years. As a consequence of rising ridership and decaying infrastructure, the network is plagued by delays and frequently fails to deliver New Yorkers to their destinations on time. While these delays are a headache for anyone who depends on the subway to get around, they do not affect all riders in the same way. In this post, we explain why subway delays disproportionately affect low-income New Yorkers. We show that wealthier commuters who rely on the subway are less likely to experience extensive issues ...
State Investment in Higher Education: Effects on Human Capital Formation, Student Debt, and Long-Term Financial Outcomes of Students
Most public colleges and universities rely heavily on state financial support. As state budgets have tightened in recent decades, appropriations for higher education have declined substantially. Despite concerns expressed by policymakers and scholars that the declines in state support have reduced the return to education investment for public sector students, little evidence exists that can identify the causal effect of these funds on long-run outcomes. We present the first such analysis in the literature using new data that leverages the merger of two rich datasets: consumer credit records ...
How Is Online Shopping Affecting Retail Employment?
It’s been said that if you want to know how the economy is doing, look at how many people are carrying shopping bags. That adage may not hold so well today. The rise of the internet and e-commerce over the past two decades has chipped away at the market share of “brick and mortar” retailers. But it’s only been in the past few years that this shift in market share has had a noteworthy effect on retail employment. In this post, we focus on national and local employment trends in two categories of retail—department stores and nonstore retailers—and try to assess how the surge in ...
Getting ahead by spending more? Local community response to state merit aid programs
In more than half of U.S. states over the past two decades, the implementation of merit aid programs has dramatically reduced net tuition expenses for college-bound students who attend in-state colleges. Although the intention of these programs was to improve access to enrollment for high-achieving students, it is possible that they had unanticipated effects. We analyze whether state funding for higher education and K-12 education changed as a result of program implementation, and whether local school districts attempt to counter any such changes. We employ two methodologies to study whether ...
How Will the New Tax Law Affectt Homeowners in High Tax States? It Depends
The Tax Cuts and Jobs Act of 2017 (TCJA) introduces significant changes to the federal income tax code for individuals and businesses. Several provisions of the new tax law are particularly significant for the owner?occupied housing market. In this blog post, we compare the federal tax liability and the marginal after-tax cost of mortgage interest and property taxes under the old and new tax codes for a wide range of hypothetical recent home buyers in a high tax state. We find that impacts vary substantially along the income/home price distribution.
Are Student Loan Defaults Cyclical? It Depends
This post is the second in a two-part series on student loan default behavior. In the first post, we studied how educational characteristics (school type and selectivity, graduation, and major) and family background relate to the incidence of student loan default. In this post, we investigate whether default behavior has varied across cohorts of borrowers as the labor market evolved over time. Specifically, does the ability of student loan holders to repay their loans vary with the state of the labor market? Does the type of education these students received make any difference to this ...