Full Citation

Title: How risky is college investment?

Citation Type: Journal Article

Publication Year: 2017

ISBN:

ISSN:

DOI: https://doi.org/10.1016/j.red.2017.03.003

NSFID:

PMCID:

PMID:

Abstract: This paper is motivated by the fact that nearly half of U.S. college students drop out without earning a bachelor's degree. Its objective is to quantify how much uncertainty college entrants face about their graduation outcomes. To do so, we develop a quantitative model of college choice. The innovation is to model in detail how students progress towards a college degree. The model is calibrated using transcript and financial data. We find that more than half of college entrants can predict whether they will graduate with at least 80% probability. As a result, stylized policies that insure students against the financial risks associated with uncertain graduation have little value for the majority of college entrants.

Url: https://www.sciencedirect.com/science/article/pii/S1094202517300406?via%3Dihub

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Authors: Hendricks, Lutz; Leukhina, Oksana

Periodical (Full): Review of Economic Dynamics

Issue:

Volume: 26

Pages: 140-163

Data Collections: IPUMS CPS

Topics: Education

Countries: