Showing papers by "Justine S. Hastings published in 2015"

The Effects of Earnings Disclosure on College Enrollment Decisions

Abstract: We test the impact of information about institution- and major-specific labor market outcomes on college enrollment decisions using a randomized controlled trial administered within the online Chilean federal student loan application process. Using linked secondary and post-secondary education records and tax returns for fourteen cohorts of Chilean high school graduates, we created measures of past-cohort earnings for nearly all institution and major combinations in the Chilean higher education system. Applicants were asked a series of survey questions about their enrollment plans and their beliefs about earnings and cost outcomes. Following the survey questions, randomly selected applicants were given information on earnings and costs for past students at their planned enrollment choices, as well as access to a searchable database that allowed them to compare earnings and costs across degrees. Students have unbiased but highly variable beliefs about costs, and upward-biased beliefs about earnings outcomes. Poorer students have less accurate information and choose lower-earning degrees conditional on baseline ability and demographics. While treatment has no effect on whether students enroll in postsecondary education, it does cause low-SES students to enroll in degrees where earnings net of costs were higher for past enrollees. Though effect sizes are small, they substantially exceed the cost of implementing the disclosure policy.

(Un)Informed College and Major Choice: Evidence from Linked Survey and Administrative Data

Abstract: We use large-scale surveys of Chilean college applicants and college students to explore the way students form beliefs about earnings and cost outcomes at different institutions and majors and how these beliefs relate to degree choice and persistence Linking our survey records to administrative education and earnings data, we compare earnings and cost expectations to observed values for past students and follow survey participants forward to see how beliefs relate to matriculation and dropout outcomes We find that students have correctly centered but noisy cost expectations, and appear to systematically overestimate earnings outcomes for past graduates Students who overestimate costs are less likely to matriculate in any degree program and in their stated first-choice program, and are more likely to drop out Students who overestimate earnings matriculate at similar rates to other students, but choose degree programs where past students have been less likely to graduate, have earned less early in their careers, and have been more likely to default on student loans Consistent with an informal model of enrollment choice, students with a stated preference for labor market-related degree characteristics are less likely to overestimate earnings outcomes and choose degrees where past students have gone on to earn more, while the opposite is true for students with a stated preference for enjoyment of the curriculum

The Effects of Earnings Disclosure on College Enrollment Decisions

Abstract: We use a large-scale survey and field experiment to evaluate a policy that provided information about earnings and costs to college applicants in Chile. The intervention was administered by the Chilean government and reached 30% of student loan applicants. Students overestimate post-graduation earnings outcomes at low-earning college degree programs but have reasonably accurate beliefs about tuition. Disclosure of earnings outcomes for past graduates reduces demand for degrees in the bottom tercile of the expected labor market return distribution by 3.3%. Effects are concentrated among low-SES and low-scoring students. Effect size is limited by strong preferences for non-earnings degree attributes.

Connecting Student Loans to Labor Market Outcomes: Policy Lessons from Chile

Abstract: Rising student loan default rates and protests over debt suggest that many students make college enrollment and financing choices they regret. Policymakers have considered tying the availability of federally subsidized loans at degree programs to financial outcomes for past students. This paper considers the implementation of such a policy in Chile. We describe how loan repayment varied by degree type at baseline, the design of the loan reform, and how earnings-based loan caps change availability of loans and incentives for students and higher education institutions. We discuss the challenges facing policymakers seeking to link loan availability to earnings outcomes.

(Un)Informed College and Major Choice: Evidence from Linked Survey and Administrative Data

Abstract: We use large-scale surveys of Chilean college applicants and college students to explore the way students form beliefs about earnings and cost outcomes at different institutions and majors and how these beliefs relate to degree choice and persistence. Linking our survey records to administrative education and earnings data, we compare earnings and cost expectations to observed values for past students and follow survey participants forward to see how beliefs relate to matriculation and dropout outcomes. We find that students have correctly centered but noisy cost expectations, and appear to systematically overestimate earnings outcomes for past graduates. Students who overestimate costs are less likely to matriculate in any degree program and in their stated first-choice program, and are more likely to drop out. Students who overestimate earnings matriculate at similar rates to other students, but choose degree programs where past students have been less likely to graduate, have earned less early in their careers, and have been more likely to default on student loans. Consistent with an informal model of enrollment choice, students with a stated preference for labor market-related degree characteristics are less likely to overestimate earnings outcomes and choose degrees where past students have gone on to earn more, while the opposite is true for students with a stated preference for enjoyment of the curriculum.