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Student loans: liquidity constraint and higher education in South Africa

Gurgand, Marc; Lorenceau, Adrien; Mélonio, Thomas

Abstract:
Empirical evidence that access to higher education is constrained by credit availability is limited and usually indirect. This paper provides direct evidence by comparing university enrollment rates of South African potential students, depending on whether they get a loan or not to cover their registration fees, in a context where such fees are high. We use matched individual data from both a credit institution (Eduloan) and the Department of Education. Based on a regression discontinuity design using the fact that loans are granted according to a credit score threshold, we can estimate the causal impact of loan obtainment. We find that the credit constraint is substantial, as it decreases the enrollment rate into higher education by more than 20 percentage points in a population of student loan applicants.

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Document Title: Student loans: liquidity constraint and higher education in South Africa
Institution: Paris School of Economics
City and Country: Paris


Date:2011
Document Type:Paper (Not Peer Reviewed)
Subject Area:Finance and Physical Resources
Country:South Africa
Keywords:Student Loans, Student Loan Schemes, Student Financial Aid, Student Fees, South Africa


Date Added:20 October 2011


Student loans: liquidity constraint and higher education in South Africa