Student Loan Repayment and College Accountability

Summary: Student loan debt and defaults have been steadily rising, igniting public worry about the associated public and private risks. This has led to controversial attempts to curb defaults by holding colleges, particularly those in the for-profit sector, increasingly accountable for the student loan repayment behavior of their students. These efforts attempt to protect taxpayers against the misuse of public money used to encourage college enrollment and to safeguard students against potentially risky human capital investments. Recent policy proposals penalize colleges for students ’ poor repayment performance, raising questions about institutions ’ power to influence this behavior. Extant research does not conclusively establish a causal link between type of college and loan default. Available evidence, moreover, suggests that student demographics and family financial resources are related to default. As a result, policies targeting schools where students default on loans at high rates may disproportionately affect the postsecondary decisions of certain categories of students, such as lowincome, minority, and financially independent students. Policymakers therefore face the challenge of promoting the efficient use of public funds and protecting students while also encouraging access to higher education

The Economics of Parenting, Self-Esteem, and Academic Performance: Theory and a Test

This paper develops a theory about how signals sent to a child by an altruistic parent affect a child\u27s self-esteem, effort and long-term performance when a parent has better information about child ability than children do themselves. We carry out OLS, 2SLS, and 3SLS estimations of our model on a sample of 651 college students. Our results show some complementary actions before college, such as parental praise, foster academic achievement above what natural ability would predict. Conversely, we find some substitutionary actions before college, such as providing them cars as gifts, are associated with lower effort in college and underachievement.

Federal Student Loan Servicing Accountability and Incentives in Contracts

Student loan servicers play a critical and underappreciated role in federal student loan programs. The federal government contracts out to servicers an array of many of the most critical functions related to student loan repayment, including account management, payment processing, and the provision of information about payment plans and solutions for distressed borrowers. In fact, most borrowers’ interactions with federal student loan repayment are almost exclusively with their servicer. We aim to improve upon the scarce research literature about federal student loan servicers by exploring the complicated set of measures that determine how servicers are compensated for servicing each debtor and awarded portfolios for future business. The coverage and construction of these measures influence servicers’ behaviors by creating strong incentives that coincide to varying degrees with the goals of the government, public, student loan borrowers, and the servicers themselves. Understanding accountability and incentives in current and past contracts is critical as the U.S. Department of Education reforms servicer contracts and responsibilities through its Next Gen Federal Student Aid initiative

Guest Editors’ Introduction: Strengthening Financial Aid Researcher-Practitioner Partnerships

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Guest Editors’ Conclusions: Financial Aid Practitioner-Researcher Partnerships: Lessons from the Field

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A avaliação dos critérios de elegibilidade para alunos iniciantes e na metade da carreira profissional: Evidências de um Programa MPA nos EUA

As applications for graduate and professional degree programs have reached unprecedented levels over the past decade, the applicant pool has become more diverse with more mid-career students deciding to return to school. Given the growth and diversification of the graduate applicant pool, many graduate programs are struggling to develop stronger admission package criteria that assure students admitted to their program have the pre-requisite skills needed to succeed. We examine which commonly used graduate admission criteria, particularly the Graduate Record Exam (GRE), correlate with the academic performance of both early and mid-career professional students. Using data from student files from a southeastern U.S. graduate public administration program, we find that the GRE score, undergraduate grade point average, and type of undergraduate institution are good predictors of graduate performance, but that the value of these admission criteria differs for early and mid- career students.Las aplicaciones para los programas de posgrado han alcanzado niveles sin precedentes en la última década, el número de solicitantes se ha vuelto más diverso, con más estudiantes en la mitad de sus carreras profesionales tomando la decisión de regresar a la universidad. Dado el crecimiento y la diversificación del grupo de solicitantes de postgrado, muchos programas de están luchando para desarrollar criterios de admisión de más fuertes que aseguren los estudiantes admitidos en sus programas tienen las habilidades y pre-requisitos necesarios para ser exitosos en sus estudios. Examinamos los criterios de admisión de posgrado comúnmente utilizados, en particular el Graduate Record Exam (GRE), y como se correlacionan con el rendimiento académico de los estudiantes, tanto principiantes como los profesionales a mitad de carrera. El uso de datos de los archivos del estudiante de un programa de administración pública de posgrado de del sudeste Estados Unidos, encontramos que la puntuación de GRE, el promedio de las notas y el tipo de institución de pregrado son buenos predictores para el desempeño en posgrado, pero que el valor de estos criterios de admisión difieren para estudiantes principiantes y estudiantes a mitad de carrera.As inscrições nos programas de pós-graduação alcançaram níveis sem precedentes na última década, o grupo de candidatos tornou-se mais diversificado, com mais alunos no meio das suas carreiras profissionais tomando a decisão de voltar para a faculdade. Dado o crescimento e diversificação do grupo de candidatos de pós-graduação, muitos programas estão procurando desenvolver critérios de aceitação mais rigorosos para assegurar que os estudantes aceitos em seus programas tinham as habilidades e pré-requisitos necessários para ser bem sucedidos em seus estudos. Foram examinados os critérios de admissão de pós-graduação comumente utilizados, especialmente o Graduate Record exame (GRE), e como eles se relacionam com o desempenho acadêmico dos alunos, novatos e dos profissionais em meio das carreiras. Usando dados dos estudante de um programa de pós-graduação da administração pública do sudeste dos Estados Unidos, descobrimos que GRE, a média das avaliações e do tipo de instituição de graduação são bons indicadores de desempenho em pós-graduação mas o valor destes critérios de admissão são diferentes para alunos iniciantes e alunos em meio de carreira profissional

Who do College Students Turn to for Financial Aid and Student Loan Advice, and is it Advice Worth Following?

In this article, we examine the sources of information that college students turn to as they make decisions related to financial aid and student loans. Based on interview data from 25 undergraduate students from one public, four-year institution, our results reveal a great amount of variation in the number and nature of sources on which students rely. Across nearly all cases, students believed their access to assistance to be insufficient. This was true even for students with parents who attended college—commonly considered to be a high-quality source of support for students, when available—as students often found their advice outdated, confusing, or unhelpful

U.S. Counties with Higher Drug Overdose Rates Have Lower School Test Scores

The impacts of the contemporary U.S. drug overdose crisis on child and family wellbeing have been profound. This brief describes the link between county-level opioid overdose rates and children’s test scores, finding that counties with higher overdose rates have lower average 3rd and 8th-grade test scores than counties with lower overdose rates. The relationship between higher overdose rates and lower test scores is particularly strong in rural counties. The places with the highest overdose rates and lowest test scores tend to be economically-disadvantaged, suggesting that economic investments may be needed to address the issue

Income-Tested College Financial Aid and Labor Disincentives

Working has become commonplace among college students; however, this activity can have unexpected financial consequences. Federal formulas implicitly tax the amount of financial aid students are eligible to receive by as much as 50 cents for each marginal dollar of income. This tax creates an incentive for college students to reduce income, though abstruse formulas and the timing of financial aid receipt are likely to limit responses. Using data from a national sample of financially independent college students in the United States, I do not find that students bunch below earnings protection thresholds in a manner that would indicate attempts to avoid reductions in financial aid in total or grants specifically. Moreover, I do not find evidence that implicit income taxes predict lower earnings in a manner that suggests that students meaningfully reduce earnings in response to the tax. Therefore, while economically efficient, the reduction in aid has the potential to burden low-income students who need to both work and receive financial aid in order to afford college expenses