دانلود رایگان مقاله ریسک به اشتراک گذاری و سیاست وام دانشجویی

Abstract

This paper examines the potential costs and benefits associated with a risk-sharing policy imposed on all higher education institutions. Under such a program, institutions would be required to pay for a portion of the student loans among which their students defaulted. I examine the predicted institutional responses under a variety of possible penalties and institutional characteristics using a straightforward model of institutional behavior based on monopolistic competition. I also examine the impact of a risk-sharing program on overall economic efficiency by estimating the returns to scale for undergraduate enrollment (as well as other outputs) among each of ten educational sectors. My estimates suggest that a risk-sharing program would induce only a modest tuition increase, with considerable heterogeneity across sectors. Two different penalty structures are analyzed in the context of the model, and alternative institutional responses such as tuition discounting and credit rating students are discussed.

5. Conclusion

As student loan debt continues to rise, a wide variety of policies aimed at reducing student debt and default rates have been proposed. This paper seeks to evaluate the costs and benefits of one such proposal, often referred to as risk-sharing. Under a risksharing program, postsecondary institutions would be obligated to pay for a portion of the debt which is defaulted on by their students. In contrast to current regulations involving default rates which are only binding for schools with very high default rates, a risk-sharing program would incentivize all institutions to reduce their default rates. This paper examines the potential response of institutions to the introduction of risk-sharing under a variety of scenarios involv-ing the magnitude of institutional penalties and the tuition elasticity of demand. I find that even a small degree of improvement in default rates (10%) would lead to considerable savings in national student loan debt, with the bulk of the gains coming from 4-year for-profit institutions. Tuition increases are likely to be modest at most schools based on the results of this analysis, but policymakers should be aware that risk-sharing would put positive pressure on tuition rates. Furthermore, I find no evidence that there would be a sharp decline in overall cost efficiency in the event that a risksharing program induced students to enroll in a different educational sector. When evaluating the tradeoffs inherent in a risk-sharing system, it is important to remember that rationale for such a program is not primarily to reduce the aggregate student loan debt burden (this would only be a pleasant by-product). The real goal is to tie the incentives of institutions to the financial futures of the students they serve. Moreover, the generic penalty structure which does not emphasize any particular reform is a feature rather than a flaw. Institutions will be incentivized to improve their students’ outcomes through whatever means possible, with the optimal policies almost certainly differing across schools.