Student Debt and Default: The Role of For-profit Colleges

Published: 6 December 2021| Version 1 | DOI: 10.17632/jjb3s85dss.1
, Rajashri Chakrabarti,


The files include data that will replicate the tables and figures of the paper "Student Debt and Default: The Role of For-profit Colleges". The data we use in this analysis come from five sources: Quarterly Census of Employment and Wages (QCEW), Integrated Postsecondary Education Data System (IPEDS), National Student Loan Data System (NSLDS), College Scorecard data (CSD), and the US Census. The data are described in detail in the paper. We isolate the causal effect of for-profit enrollment on student debt and repayment outcomes as well as the educational and labor market mechanisms that drive any such effects. We approach this problem using a novel instrument combined with comprehensive institution-level data on student debt, default, educational attainment, and labor market outcomes. Our instrument leverages the interaction between changes in the demand for college due to labor demand shocks and the baseline supply of for-profit schools. We compare how enrollment and subsequent outcomes change across areas that experience similar labor demand shocks but that have different latent supply of for-profit institutions. The first-stage estimates show that students are much more likely to enroll in a for-profit institution for a given labor demand change when there is a higher supply of such schools in the base period. Among four-year students, for-profit enrollment leads to more loans, higher loan amounts, an increased likelihood of borrowing, and an increased risk of default. Two-year for-profit students also take out more loans, originate more student debt, and have higher default rates. We present evidence that these debt and default outcomes are driven by higher for-profit tuition and a negative effect of for-profit enrollment on labor market outcomes. Our results point to high costs and low returns to for-profit enrollment that generate worse student debt and repayment outcomes.


Steps to reproduce

Use the codes in the "codes" folder with the data files in "data" folder to reproduce the paper tables and figures.


National Bureau of Economic Research, CESifo Group Munich, Cornell University, Federal Reserve Bank New York, Stanford University


Education, Labor Market, Debt