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ERIC Number: ED530415
Record Type: Non-Journal
Publication Date: 2012
Pages: 10
Abstractor: ERIC
Reference Count: 20
Credit Constraints for Higher Education
Solis, Alex
Society for Research on Educational Effectiveness
This paper exploits a natural experiment that produces exogenous variation on credit access to determine the effect on college enrollment. The paper assess how important are credit constraints to explain the gap in college enrollment by family income, and what would be the gap if credit constraints are eliminated. Progress in college and dropout rates are also investigated. On each year, an average of 211,000 students took the PSU test and participate in the college admission process. To estimate the RD parameters the author is able to use a very small window around the threshold. To be conservative, all the RD results shown in the paper consider 2 PSU points around the threshold, that implies 6,000 students around the cut-off. The author observed that the elimination of the credit restriction has a significant effect on college enrollment. The effects are stronger for the poorest quintile. When loan access is granted for students above the cut-off, college enrollment gap by family income disappeared. This evidence suggests that an important part of the gap is a consequence of imperfect access to credit markets among the poorest. These results strongly support programs that grant access to the credit markets to the poor, who may alleviate in some degree the intergenerational inequality. The effects on medium run enrollment and dropout rates indicate that credit constraints are not only important for initial enrollment, but also play an important role for college progress. Having access to financing may allow students to focus on studying rather than in part-time jobs. The effects are particularly important for the lowest two income quintiles which were expected to be more constrained. All these evidence put together indicates that credit access have a very important effect on college enrollment, and college attainment, that may explain the big gap by family income. These shed light on the importance of programs that alleviate financial burden for the poor. (Contains 4 tables and 2 figures.)
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Publication Type: Reports - Research
Education Level: Higher Education
Audience: N/A
Language: English
Sponsor: N/A
Authoring Institution: Society for Research on Educational Effectiveness (SREE)
Identifiers - Location: Chile