Albagli, Pinjas and García-Echalar, Andrés (2025) Rethinking student loan design: evidence from a price-based reform in Chilean higher education. Economics of Education Review, 109. ISSN 0272-7757
Full text not available from this repository.Abstract
This paper examines the effects of a major 2012 student loan reform in Chile that reduced interest rates from 6% to 2% and introduced more flexible repayment terms. Unlike studies of initial loan implementation, this reform offers a rare opportunity to examine how changes in the cost of borrowing affect enrollment decisions among already-eligible students. Using rich administrative data and a difference-in-differences design, we estimate the effects of the reform on immediate enrollment, second-year enrollment, and second-year dropout. To strengthen causal inference, we complement our strategy with a difference-in-discontinuities approach that leverages eligibility thresholds. We find a compositional shift in immediate enrollment: university enrollment increases by 2.5 percentage points, offset by an equal decline in vocational institutions, with no effect on overall enrollment. This shift persists into second-year outcomes, where university students exhibit slightly higher dropout and vocational students show improved persistence. These effects are concentrated among students from voucher schools and are absent among students from public schools, likely due to persistent academic and financial constraints. We also find that overall enrollment declines for female students, which may reflect greater risk aversion in response to uncertainty. These findings shed light on how price-based reforms to student loan programs can generate unequal responses across student groups and institutional sectors, offering valuable lessons for the design of equitable higher education financing.
| Item Type: | Article |
|---|---|
| Additional Information: | © 2025 Elsevier Ltd |
| Divisions: | Economics |
| Subjects: | L Education > LB Theory and practice of education > LB2300 Higher Education |
| JEL classification: | I - Health, Education, and Welfare > I2 - Education > I22 - Educational Finance I - Health, Education, and Welfare > I2 - Education > I28 - Government Policy |
| Date Deposited: | 04 Nov 2025 16:36 |
| Last Modified: | 04 Nov 2025 16:36 |
| URI: | http://eprints.lse.ac.uk/id/eprint/130051 |
Actions (login required)
 |
View Item |
