NotesFAQContact Us
Search Tips
ERIC Number: ED505608
Record Type: Non-Journal
Publication Date: 2007-Nov
Pages: 24
Abstractor: As Provided
Reference Count: 25
Do Loans Increase College Access and Choice? Examining the Introduction of Universal Student Loans. Working Paper 07-1
Long, Bridget Terry
Federal Reserve Bank of Boston
The returns to college are substantial, including increased earnings and public benefits, such as better health and increased involvement in public service and giving. As a result, since the introduction of the Guaranteed Student Loan program in 1965 and the Pell Grant in 1972, the federal government has experimented with using financial aid to increase college access, choice, and affordability. Although years of research support the notion that financial aid can influence students' postsecondary decisions, questions remain about the best ways to design such programs and the relative effectiveness of different types of aid. Due to the fact that an overwhelming proportion of the research on financial aid focuses on grants, little is known about how a recent shift to loans has affected student access to higher education and their choice of institutions. Because loans are a much more complicated form of financial aid than grants, there is reason to suspect that their effectiveness differs from other aid. This paper attempts to provide additional information on the impact of loans on college decisions by focusing on the period during which college loans were made available to all families, regardless of financial need. The major shift in aid policy occurred due to the 1992 Higher Education Reauthorization Act (HEA92). By exploiting this 1992 policy change as a natural experiment, this paper examines the impact of introducing a student loan program on college enrollment and choice. The analysis uses the Consumer Expenditure Survey (CES) to detail how the number of students in college (e.g., the access question) and the amount of money spent on higher education and related expenses (e.g., the choice question or "how much" education was bought) changed after the policy change. (Contains 14 footnotes, 2 figures, and 8 tables.)
Federal Reserve Bank of Boston. P.O. Box 55882, Boston, MA 02205. Tel: 617-973-3000; Tel: 617-973-3397; e-mail:; Web site:
Publication Type: Reports - Evaluative
Education Level: Higher Education; Postsecondary Education
Audience: N/A
Language: English
Sponsor: N/A
Authoring Institution: Federal Reserve Bank of Boston, MA.
Identifiers - Laws, Policies, & Programs: Guaranteed Student Loan Program