Taking it to the Limit: Effects of Increased Student Loan Availability on Attainment, Earnings, and Financial Well-Being

54 Pages Posted: 10 Aug 2020 Last revised: 29 Jul 2021

See all articles by Sandra Black

Sandra Black

Columbia University

Jeffrey Denning

Brigham Young University

Lisa J. Dettling

Board of Governors of the Federal Reserve System

Sarena Goodman

Board of Governors of the Federal Reserve System

Lesley J. Turner

Vanderbilt University

Date Written: August 2020

Abstract

Growing reliance on student loans and repayment difficulties have raised concerns of a student debt crisis in the United States. However, little is known about the effects of student borrowing on human capital and long-run financial well-being. We use variation induced by recent expansions in federal loan limits, together with administrative schooling, earnings, and credit records, to identify the effects of increased student borrowing on credit-constrained students’ educational attainment, earnings, debt, and loan repayment. Increased student loan availability raises student debt and improves degree completion, later-life earnings, and student loan repayment while having no effect on homeownership or other types of debt.

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Suggested Citation

Black, Sandra and Denning, Jeffrey and Dettling, Lisa J. and Goodman, Sarena and Turner, Lesley J., Taking it to the Limit: Effects of Increased Student Loan Availability on Attainment, Earnings, and Financial Well-Being (August 2020). NBER Working Paper No. w27658, Available at SSRN: https://ssrn.com/abstract=3670493

Sandra Black (Contact Author)

Columbia University

Jeffrey Denning

Brigham Young University ( email )

Provo, UT 84602
United States

Lisa J. Dettling

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Sarena Goodman

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Lesley J. Turner

Vanderbilt University ( email )

2301 Vanderbilt Place
Nashville, TN 37240
United States

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