Authors: Jaymes Pyne, Eric Grodsky

August 2018, 18 pp.

Abstract: When planning for college, students face a range of constrained choices governed in part by variation between institutions. What are the economic consequences of those decisions and constraints both during and after college? We know borrowing patterns vary by institutional sector, yet colleges within a sector vary considerably in admission and graduation rates, degree returns, and costs for students.

Using data from the Beginning Postsecondary Students and Baccalaureate and Beyond studies, we evaluate undergraduate student loan debt and labor market outcomes differentiated by both institutional sector and competitiveness. First, we corroborate previous research findings that recent growth in educational debt is mainly confined to the top fifth of borrowers. Second, we find that the sector and selectivity of institutions predict both graduation rates and higher borrowing. In-state public institutions provide a safe haven for high debt relative to public out-of-state and less competitive private colleges. Finally, we find that this differential risk of exposure to high borrowing matters for labor market outcomes among graduates from less-competitive institutions. Once these students enter the top fifth of borrowing, the type of institution they attended matters less to their early experiences in the labor market.

Keywords: student debt, undergraduate education, higher education, inequality, returns to education

Read the full working paper: Where’s the Crisis? How Undergraduate Enrollment Patterns Influence Growth in Student Debt (PDF)