Risk-Sharing and Student Loan Policy: Consequences for Students and Institutions
| dc.contributor.author | Webber, Douglas A. | |
| dc.date.accessioned | 2020-11-17T16:57:51Z | |
| dc.date.available | 2020-11-17T16:57:51Z | |
| dc.date.issued | 2015-02-23 | |
| dc.description.abstract | This paper examines the potential costs and benefits associated with a risk-sharing policy imposed on all higher education institutions. Under such a program, institutions would be required to pay for a portion of the student loans among which their students defaulted. I examine the predicted institutional responses under a variety of possible penalties and institutional characteristics using a straightforward model of institutional behavior based on monopolistic competition. I also examine the impact of a risk-sharing program on overall economic efficiency by estimating the returns to scale for undergraduate enrollment (as well as other outputs) among each of ten educational sectors. I find that even a relatively small incentive effect of a risk-sharing would lead to a substantial decline in overall student debt. There is considerable heterogeneity across sectors, with 4-year for-profit institutions accounting for the majority of the savings. My estimates suggest that a risk-sharing program would induce a modest tuition increase, but that there is unlikely to be a substantial loss of economic efficiency in terms of costs due to a reallocation of students across sectors. | |
| dc.description.legacydownloads | cheri_wp163.pdf: 19 downloads, before Oct. 1, 2020. | |
| dc.identifier.other | 15776622 | |
| dc.identifier.uri | https://hdl.handle.net/1813/74635 | |
| dc.language.iso | en_US | |
| dc.rights | Required Publisher Statement: Published by the Cornell Higher Education Research Institute, ILR School, Cornell University. | |
| dc.subject | higher education | |
| dc.subject | student loans | |
| dc.subject | risk-sharing | |
| dc.title | Risk-Sharing and Student Loan Policy: Consequences for Students and Institutions | |
| dc.type | article | |
| local.authorAffiliation | Webber, Douglas A.: Temple University |
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