Where's the Crisis? How Undergraduate Enrollment Patterns Influence Growth in Student Debt. WCER Working Paper No. 2018-10

When planning for college, students face a range of constrained choices governed in part by variation among institutions. What are the economic consequences of those decisions and constraints during and after college? We know borrowing patterns vary by institutional sector, yet colleges within a sector vary considerably by admission and graduation rates, returns to degrees, and costs for students. Using data from the Beginning Postsecondary Students and Baccalaureate and Beyond studies, we evaluate undergraduate student loan debt and labor market outcomes differentiated by institutional sector and competitiveness. First, we corroborate previous research finding that recent growth in educational debt is mainly confined to the top fifth of borrowers. Second, we find that the sector and selectivity of institutions predict both graduation rates and higher borrowing. In-state public institutions provide a haven from high debt relative to public out-of-state and less competitive private colleges. Finally, we find this differential risk of exposure to high borrowing is what matters for labor market outcomes of graduates from less-competitive institutions. Once these students enter the top fifth of borrowing, early labor market experiences have more influence than what kind of college students attend.