The nature of credit constraints and human capital
Abstract
We develop a human capital model with borrowing constraints explicitly derived from government student loan (GSL) programs and private lending under limited commitment. The model helps explain the persistent strong positive correlation between ability and schooling in the United States, as well as the rising importance of family income for college attendance. It also explains the increasing share of undergraduates borrowing the GSL maximum and the rise in student borrowing from private lenders. Our framework offers new insights regarding the interaction of government and private lending, as well as the responsiveness of private credit to economic and policy changes. (JEL D14, H52, I22, I23, J24)
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- Authors
- Lochner, L. J., & Monge-Naranjo, A.
- Affiliations
- Western University (CA)
- Department of Economics, Pennsylvania State University, 502 Kern Graduate Building, University Park, PA, 16802-3306.
- ORCID
- Lochner, Lance J
- Venue
- American Economic Review
- Publisher
- American Economic Association
- Published
- 2011-10-01
- Volume
- 101
- Issue
- 6
- Pages
- 2487-2529
- ISSN
- 0002-8282 (ISSN-L)
- OpenAlex
- W2141338042
- Cited by
- 347
- References
- 57
- Citations by year
- 2026: 22 · 2025: 18 · 2024: 19 · 2023: 16 · 2022: 21 · 2021: 12 · 2020: 28 · 2019: 16 · 2018: 22 · 2017: 32 · 2016: 31 · 2015: 27 · 2014: 32 · 2013: 17 · 2012: 19
- FWCI
- 118.92
- Type
- journal article
- Language
- en
- Open access
- closed
- Locations
- American Economic Review (publishedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- Topics
- Social Sciences › Education › Higher Education Research Studies
- Social Sciences › Business, Management and Accounting › Accounting › Financial Literacy, Pension, Retirement Analysis
- Social Sciences › Education › School Choice and Performance
- Keywords
- credit constraints, human capital, student loans, private lending, limited commitment, college attendance, household income, private credit, education funding
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