Financially over-Extended: College Attendance As a Contributor to Foreclosures during the Great Recession
*Names in bold indicate Presenter
We developed random effects statistical models that regress foreclosure rates over time from 2006-12 on commuting zone variation in levels of college attendance, unemployment, tuition, subprime lending and housing finance (measured in 2006) as well as time-varying changes in these variables from compared to the 2006 baseline level. This modeling structure allows us to test whether changing foreclosure rates during the Great Recession are explained by variation between commuting zones and within commuting zones over time. We find not only that subprime lending explains a substantial portion of foreclosures (as expected by prior research), but also that changes in college attendance rates among middle- and high-income families also predict additional variation in the rates of foreclosure. These findings are robust to a range of control variables.