Labor Market Returns to Student Loans for University: Evidence from Chile
Abstract
We study the labor market returns to a state-guaranteed loan used to finance university degrees in Chile. Using a regression discontinuity design, we show that marginally eligible students forgo vocational education in favor of university education but reduce their probability of graduation. Even though university loan takers accumulate more student debt, their labor market outcomes are not different from those of ineligible students. We find suggestive evidence that the lower quality of the receiving institutions accounts for these results. Finally, we extrapolate the effects away from the eligibility cutoff and show that supramarginal students benefit from this policy.
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In the Chilean context, student loans reduced eventual degree completion and earnings, by inducing students to switch from higher quality vocational institutions to lower quality universities.
“Subsequent research on the same program by Bucarey, Contreras, & Muñoz (2020) finds, however, that student loans in the Chilean context reduced eventual degree completion and earnings, by inducing students to switch from higher quality vocational institutions to lower quality universities.”
From College Costs, Financial Aid, and Student Decisions (2022) · cites this paper as Bucarey, Contreras, & Muñoz (2020)
A loan program in Chile reduced degree completion and earnings by creating incentives for students to attend lower-quality institutions.
“Bucarey, Contreras, & Munoz (2020) found that a loan program in Chile reduced degree completion and earnings by creating incentives for students to attend lower-quality institutions.”
From College Costs, Financial Aid, and Student Decisions (2022) · cites this paper as Bucarey, Contreras, & Munoz (2020)
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References 34 · Cited by 30
- Authors
- Bucarey, A., Contreras, D., & Muñoz, P.
- Affiliations
- University of Chile (CL)
- Escola Brasileira de Economia e Finanças (BR)
- Venue
- Journal of Labor Economics
- Publisher
- University of Chicago Press
- Published
- 2020-10-01
- Volume
- 38
- Issue
- 4
- Pages
- 959-1007
- ISSN
- 0734-306X (ISSN-L)
- 1537-5307
- OpenAlex
- W2976605785
- Cited by
- 30
- References
- 34
- Citations by year
- 2026: 2 · 2025: 5 · 2024: 3 · 2023: 4 · 2022: 10 · 2021: 5 · 2020: 1
- FWCI
- 10.79
- Type
- journal article
- Language
- en
- Open access
- closed
- Locations
- Journal of Labor Economics (publishedVersion)
- Universidad de Chile (submittedVersion)
- Topics
- Social Sciences › Education › Higher Education Research Studies
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Labor market dynamics and wage inequality
- Social Sciences › Sociology and Political Science › Intergenerational and Educational Inequality Studies
- Keywords
- student loans, university education, labor market returns, student debt, graduation rates, vocational education, educational quality, higher education policy, Chile
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