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Discussion Paper
Measuring Racial Disparities in Higher Education and Student Debt Outcomes
Across the United States, the cost of all types of higher education has been rising faster than overall inflation for more than two decades. Despite rising costs, aggregate undergraduate enrollment rose steadily between 2000 and 2010 before leveling off and dipping slightly to its current level. Rising college costs have steadily increased dependence on student debt for college financing, with many students and parents turning to federal and private loans to pay for higher education. An earlier post in this series reported that borrowers in majority Black areas have higher student loan ...
Speech
Opening remarks at the Convening on Student Loan Data Conference
Remarks at the Convening on Student Loan Data Conference, Federal Reserve Bank of New York, New York City.
Working Paper
The Effect of Student Loan Payment Burdens on Borrower Outcomes
Rising student loan debt and concerns over unaffordable payments provide a rationale for the broad class of “income-driven repayment” (IDR) plans for federal student loans. These plans aim to protect borrowers from delinquency, default, and resulting financial consequences by linking payments to income and providing forgiveness after a set repayment period. We estimate the causal effect of IDR payment burdens on loan repayment and schooling outcomes for several cohorts of first-time IDR applicants using a regression discontinuity design. Federal student loan borrowers who are not required ...
Working Paper
The Effect of Student Loan Payment Burdens on Borrower Outcomes
Rising student loan debt and concerns over unaffordable payments provide a rationale for the broad class of “income-driven repayment” (IDR) plans for federal student loans. These plans aim to protect borrowers from delinquency, default, and resulting financial consequences by linking payments to income and providing forgiveness after a set repayment period. We estimate the causal effect of IDR payment burdens on loan repayment and schooling outcomes for several cohorts of first-time IDR applicants using a regression discontinuity design. Federal student loan borrowers who are not required ...
Working Paper
Navigating Higher Education Insurance: An Experimental Study on Demand and Adverse Selection"
We conduct a survey-based experiment with 2,776 students at a non-profit university to analyze income insurance demand in education financing. We offered students a hypothetical choice: either a federal loan with income-driven repayment or an income-share agreement (ISA), with randomized framing of downside protections. Emphasizing income insurance increased ISA uptake by 43%. We observe that students are responsive to changes in contract terms and possible student loan cancellation, which is evidence of preference adjustment or adverse selection. Our results indicate that framing specific ...
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 ...
Discussion Paper
The Role of Educational Attainment in Household Debt and Delinquency Disparities
This post concludes a three-part series exploring the gender, racial, and educational disparities of debt outcomes of college students. In the previous two posts, we examined how debt holding and delinquency behaviors vary among students of different race and gender, breaking up our analyses by level of degree pursued by the student. We found that Black and Hispanic students were less likely than white students to take on credit card debt, auto loans, and mortgage debt, but experienced higher rates of delinquency in each of these debt areas by the age of 30. In contrast, Black students were ...
Essay
Gender and Racial Disparities in Student Loan Debt
Student debt isn’t equally distributed among young adults, particularly Black adults and women, who are more likely to have loans and take longer to pay them down.
Speech
An Economic Outlook - The Wharton School
I can?t formulate education policy, or allocate funds, or even make my own children study what I want them to ? although, of course, I?m immensely proud of them and they?ve made excellent choices without listening to me. But I can point to the research and what the data say. Changing our approach to how we invest in education and training won?t take care of the entire student debt issue, but it can help those who are disproportionately affected by it.
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 ...