Search Results
Report
Student Debt and Default: The Role of For-Profit Colleges
For-profit providers have become an important fixture of U.S. higher education markets. Students who attend for-profit institutions take on more educational debt and are more likely to default on their student loans than those attending similarly selective public schools. Because for-profits tend to serve students from more disadvantaged backgrounds, it is important to isolate the causal effect of for-profit enrollment on student debt and repayment outcomes as well as the educational and labor market mechanisms that drive any such effects. We approach this problem using a novel instrument ...
Discussion Paper
College May Not Pay Off for Everyone
In our recent Current Issues article and blog post on the value of a college degree, we showed that the economic benefits of a bachelor’s degree still far outweigh the costs. However, this does not mean that college is a good investment for everyone. Our work, like the work of many others who come to a similar conclusion, is based in large part on the empirical observation that the average wages of college graduates are significantly higher than the average wages of those with only a high school diploma. However, not all college students come from Lake Wobegon, where “all of the children ...
Report
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 ...
Discussion Paper
Staying In College Longer Than Four Years Costs More Than You Might Think
In yesterday’s blog post and in our recent article in the New York Fed’s Current Issues series, we showed that the economic benefits of a bachelor’s degree still outweigh the costs, on average, even in today’s difficult labor market. Like others who assess the value of a bachelor’s degree, we base our estimates on the assumption that a student takes four years to finish the degree. But it is not uncommon for people to take longer than that. In fact, recent data indicate that among those who complete a bachelor’s degree within six years, only about two-thirds finish in four years ...
Working Paper
Stepping Stone and Option Value in a Model of Postsecondary Education
A stepping stone arises in risky environments with learning and transferable human capital. An example is the role played by academic two-year colleges in postsecondary education: Students, as they learn about the uncertain educational outcomes, can drop out or transfer up to harder and more rewarding schools, carrying a fraction of the accumulated human capital. A theory of education is built and contrasted empirically to find that i) option value explains a large part of returns to enrollment, ii) enrollment in academic two-year colleges is driven by the option to transfer up, and iii) the ...
Working Paper
Revisiting the Effect of Education on Later Life Health
We provide new evidence on the effect of education on later life health. Using variation in state compulsory schooling laws, we examine education's effect on a range of outcomes encompassing physical health, decision-making, and life expectancy. We employ under-utilized Health and Retirement Study data linked to restricted geographic identifiers, allowing us to match individuals more accurately to compulsory schooling laws. While positively related to educational attainment, compulsory schooling laws have no significant effect on later life health outcomes. Our results suggest that increased ...
Working Paper
Decomposing Outcome Differences between HBCU and Non-HBCU Institutions
This paper investigates differences in outcomes between historically black colleges and universities (HBCU) and traditional college and universities (non-HBCUs) using a standard Oaxaca/Blinder decomposition. This method decomposes differences in observed educational and labor market outcomes between HBCU and non-HBCU students into differences in characteristics (both student and institutional) and differences in how those characteristics translate into differential outcomes. Efforts to control for differences in unobservables between the two types of students are undertaken through ...
Discussion Paper
The Value of a College Degree
Not so long ago, people rarely questioned the value of a college degree. A bachelor's degree was seen as a surefire ticket to a career-oriented, good-paying job. Today, however, many people are uncertain whether going to college is such a wise decision. It's easy to see why. Tuition costs have been rising considerably faster than inflation, student debt is mounting, wages for college graduates have been falling, and recent college graduates have been struggling to find good jobs. These trends might lead one to believe that college is no longer a good investment. But when you dig into the ...
Working Paper
Do Human Capital Adjustments Protect Youths from Structural Change?
Structural changes to labor demand can have lasting consequences on the employment and earnings of workers in affected industries and geographies. However, individuals coming of age may avoid similar fates if they internalize salient changes to the returns to education and adjust their human capital investments. This paper studies the effects of exposure to structural labor demand shocks during youth and adolescence on human capital accumulation and later-life earnings. I use student-level administrative data from Texas and a modified difference-in-differences design that compares changes in ...
Discussion Paper
When College Might Not Be Worth It
In our last post, we showed that the economic benefits of a college degree still far outweigh the costs for the typical graduate, with a healthy and consistent return of 12 to 13 percent over the past few decades. But there are many circumstances under which college graduates do not earn such a high return. Some colleges are much more expensive than average, and financial aid is not guaranteed no matter which college a student attends. In addition, the potentially high cost of living on campus was not factored into our estimates. Some students also may take five or six years to finish their ...