{"id":120946,"date":"2009-12-31T15:59:03","date_gmt":"2009-12-31T20:59:03","guid":{"rendered":"http:\/\/blogs.wsj.com\/economics\/2009\/12\/31\/would-insurance-for-college-failure-keep-more-students-enrolled\/"},"modified":"2009-12-31T15:59:03","modified_gmt":"2009-12-31T20:59:03","slug":"would-insurance-for-college-failure-keep-more-students-enrolled","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/120946","title":{"rendered":"Would Insurance For College Failure Keep More Students Enrolled?"},"content":{"rendered":"

A third to a half of college students drop out, and many of them still have hefty student loans once they’re no longer enrolled. Offering insurance to protect students from the financial cost of failure could keep some of them in school, says a new paper<\/a> released by the Federal Reserve Bank of Philadelphia<\/strong>.<\/p>\n

Economists Satyajit Chatterjee<\/strong> of the Philadelphia Fed and Felicia Ionescu<\/strong> of Colgate University look at data on college enrollment, dropout and completion rates of students and analyze whether a student loan program can offer insurance against the risk of college failure. According to the Fed’s Survey of Consumer Finances, on average about 47% of non-students with a student loan report that they don’t have a two-year or four-year college degree. Those non-students who have loans but no degree also have a significantly higher burden of education debt more than a decade after taking out the loan.<\/p>\n

“The financial risk of taking out a student loan but being unable to complete college may discourage some people from taking out a loan and enrolling in college,” the economists write. “Thus, even though prospective students may not be credit constrained, a mechanism to share the risk of failing to complete college — college failure risk — might improve the welfare of enrolled students and encourage more people to enroll and complete college.”<\/p>\n

They find that “optimal” insurance in case of non-completion ranges between 10% and 45% of total college costs. Insurance would raise the enrollment rate by 3.5 percentage points, the fraction receiving a degree by 3.8 percentage points and student welfare by 2.7% on average, their paper concludes.<\/p>\n

“Students with relatively low scholastic ability and a high failure probability benefit the most from failure insurance,” the paper says. “Since these students are typically from low-income backgrounds and most in need of loans to finance the expense of a college education, our results suggest that insurance against college failure risk will be particularly useful to students from low-income backgrounds.”<\/p>\n

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A third to a half of college students drop out, and many of them still have hefty student loans once they’re no longer enrolled. Offering insurance to protect students from the financial cost of failure could keep some of them in school, says a new paper released by the Federal Reserve Bank of Philadelphia. Economists […]<\/p>\n","protected":false},"author":850,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-120946","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/120946","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/850"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=120946"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/120946\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=120946"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=120946"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=120946"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}