Panel Paper: Taking Some of the Credit: The Kalamazoo Promise and Credit Outcomes

Friday, November 3, 2017
Columbian (Hyatt Regency Chicago)

*Names in bold indicate Presenter

Brad Hershbein, W.E. Upjohn Institute for Employment Research

In recent years, there has been rapid growth in the development of place-based college scholarships, and there are now nearly 100 programs with varying levels of coverage and generosity throughout the country. Although several studies have found that these programs can increase college attendance and even completion, there is little research on how affected students fare after leaving school. Using data from a major credit bureau matched to student records, this paper employs a difference-in-difference methodology to examine credit-related outcomes for students affected by the Kalamazoo Promise, one of the oldest and most prominent place-based scholarships. The evidence on individual's student debt, other forms of borrowing, and general credit worthiness can shed causal light on policy concerns that student debt may crowd out other forms of asset accumulation or lead to lasting damage of credit. It also can provide useful measures of financial success relatively quickly after school leaving, whereas labor market outcomes require a longer lag period.