A day late and a dollar short: Liquidity and household formation among student borrowers

A-Tier
Journal: Journal of Financial Economics
Year: 2021
Volume: 142
Issue: 3
Pages: 1301-1323

Authors (3)

Goodman, Sarena (not in RePEc) Isen, Adam (not in RePEc) Yannelis, Constantine (National Bureau of Economic Re...)

Score contribution per author:

1.341 = (α=2.01 / 3 authors) × 2.0x A-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

The federal government encourages human capital investment through lending and grant programs, but resources from these programs may also finance non-education activities for liquidity-constrained students. To explore this possibility, we use administrative data for federal student borrowers linked to tax records and a sharp discontinuity generated by the timing of a student's 24th birthday, which induces a jump in federal support. We estimate a corresponding increase in homeownership, with larger effects among those most financially constrained, and find supplemental evidence of lagged marriage and fertility effects. Analysis of earnings, savings, and heterogeneity favors liquidity over human capital in explaining the results.

Technical Details

RePEc Handle
repec:eee:jfinec:v:142:y:2021:i:3:p:1301-1323
Journal Field
Finance
Author Count
3
Added to Database
2026-01-29