Credit Constraints and Enrollment Choices in Higher Education
Amanda P. Gaulke, University of Wisconsin-Madison
Stopping out, or taking a break during college, is quite common. Using the NLSY97 restricted access data, this paper first documents some stylized facts. These include the frequency of stopout, how stopouts compare with other students, consequences of stopouts and potential explanations for stopout. If students are credit constrained they might need to stop enrolling in college temporarily in order to save money to pay for school. This paper estimates the extent to which stopout behavior would be reduced if federal program loan limits were increased by $500 per semester. To better reflect loan rules student actually face, loan limits are a function of individual limits (financial need) and program limits. Using a dynamic structural model of college enrollment and savings decisions, I expect to find that credit constraints are only part of the reason students stopout.
Presented in Session P8. Economy, Labor Force, Education, and Inequality/Gender, Race and Ethnicity