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Jel Classification:I22 

Discussion Paper
Modern Income-Share Agreements in Postsecondary Education: Features, Theory, Applications

An income-share agreement (ISA) in postsecondary education is a contract in which students pledge to pay a certain percentage of their future incomes over a set period of time in exchange for funding educational program expenses in the present. Typically, participants begin to make payments once their incomes rise above a minimum threshold set by the terms of the ISA and will never pay more than a set cap (usually, a multiple of the original amount). Funding for ISAs can range from university sources to philanthropic funding and private investor capital. In this study, we describe the many ...
Consumer Finance Institute discussion papers , Paper 19-6

Report
How Should Tax Progressivity Respond to Rising Income Inequality?

We address this question in a heterogeneous-agent incomplete-markets model featuring exogenous idiosyncratic risk, endogenous skill investment, and flexible labor supply. The tax and transfer schedule is restricted to be log-linear in income, a good description of the US system. Rising inequality is modeled as a combination of skill-biased technical change and growth in residual wage dispersion. When facing shifts in the income distribution like those observed in the US, a utilitarian planner chooses higher progressivity in response to larger residual inequality but lower progressivity in ...
Staff Report , Paper 615

Working Paper
Student Loans, Access to Credit and Consumer Financial Behavior

This paper provides novel evidence that increased student loan debts, caused by rising tuitions, increase borrowers’ demand for additional consumer debt, while simultaneously restricting their ability to access it. The net effect of student loan debt on consumer borrowing varies by market, depending on whether the supply or demand channel dominates. In loosely underwritten credit markets, increased student loan debt causes borrowing to increase, while in tightly underwritten markets, increased student loan debt reduces the use of credit. These findings match predictions of a standard ...
Finance and Economics Discussion Series , Paper 2021-050

Working Paper
Student Loans and Homeownership

We estimate the effect of student loan debt on subsequent homeownership in a uniquely constructed administrative dataset for a nationally representative cohort. We instrument for the amount of individual student debt using changes to the in-state tuition rate at public 4-year colleges in the student's home state. A $1,000 increase in student loan debt lowers the homeownership rate by about 1.5 percentage points for public 4-year college-goers during their mid 20s, equivalent to an average delay of 2.5 months in attaining homeownership. Validity tests suggest that the results are not ...
Finance and Economics Discussion Series , Paper 2016-10

Journal Article
On the record: Texas students often lack skills, financial knowledge for college success

Jeff Webster is assistant vice president for research and analytical services for TG (Texas Guaranteed Student Loan Corp.), a nonprofit that promotes educational access and administers the Federal Family Education Loan Program. He has studied student loan default, debt burden and student retention.
Southwest Economy , Issue Q2 , Pages 8-9

Working Paper
WHERE DO STUDENTS GO WHEN FOR-PROFIT COLLEGES LOSE FEDERAL AID?

Recent federal investigations and new regulations have resulted in restrictions on for-profit institutions? access to federal student aid. We examine the enrollment effects of similar restrictions imposed on over 1,200 for-profit colleges in the 1990s. Using variation in regulations linked to student loan default rates, we estimate the impact of the loss of federal aid on the enrollment of Pell Grant recipients in sanctioned institutions and their local competitors. Enrollment in a sanctioned for-profit college declines by 53 percent in the five years following a sanction. For-profit ...
Working Papers , Paper 17-12

Discussion Paper
Do Expansions in Health Insurance Affect Student Loan Outcomes?

The Patient Protection and Affordable Care Act (ACA) is arguably the biggest policy intervention in health insurance in the United States since the passage of Medicaid and Medicare in 1965. The Act was signed into law in March 2010, and by 2016 approximately 20 to 24 million additional Americans were covered with health insurance. Such an extension of insurance coverage could affect not only medical bills, but also educational, employment, and broader financial outcomes. In this post, we take an initial look at the relationship between the ACA and higher education financing choices and ...
Liberty Street Economics , Paper 20180328

Report
College Tuition and Income Inequality

This paper evaluates the role of rising income inequality in explaining observed growth in college tuition. We develop a competitive model of the college market in which college quality depends on instructional expenditure and the average ability of admitted students. An innovative feature of our model is that it allows for a continuous distribution of college quality. We find that observed increases in US income inequality can explain more than the entire observed rise in average net tuition since 1990 and that rising income inequality has also depressed college attendance.
Staff Report , Paper 569

Report
Financial aid, debt management, and socioeconomic outcomes: post-college effects of merit-based aid

Prior research has demonstrated that financial aid can influence both college enrollments and completions, but less is known about its post-college consequences. Even for students whose attainment is unaffected, financial aid may affect post-college outcomes via reductions in both time to degree and debt at graduation. We utilize two complementary quasi-experimental strategies to identify causal effects of the WV PROMISE scholarship, a broad-based state merit aid program, up to ten years post-college-entry. This study is the first to link college transcripts and financial aid information to ...
Staff Reports , Paper 791

Report
Why have revenue-strapped New England school districts been slow to turn to alternative funding sources?

During and even after the Great Recession, numerous popular press stories commented on the apparent growth of non-tax revenues in the face of school district budget deficits. But Downes and Killeen (2014) show that nationally the growth of non-traditional revenues has been far less than these articles may lead the reader to believe. This paper uses data from the New England states to assess the empirical content of some of the possible explanations of this slow growth. In New England, as in the rest of the nation, non-tax revenues per pupil have grown in real terms but have not become a more ...
Current Policy Perspectives , Paper 16-1

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