Evaluating South Korea’s Introduction of an Income Contingent Loan Program

Jeongeun Kim, Mark Wiederspan

Research output: Contribution to journalArticle

Abstract

In 2010, South Korea introduced a new student loan program that was income contingent (ICL). One of the main expected outcomes of the new loan program was to provide credit-constrained students the ability to focus on their college education rather than having to work while enrolled. To this end, this study investigates the effect of ICL on college attendance as well as two first year outcomes, including students’ dropout or stop-out and working behaviors while enrolled. Using data from the Youth Panel and a difference-in-difference estimation strategy, we analyze whether or not the introduction of this new loan program improved students’ educational outcomes. Our results indicate that ICL’s introduction increased ICL eligible students’ probability of enrolling college. On the other hand, we found insufficient evidence that ICL reduces students working part-time while enrolled in college. While the findings are contrary to the policy intensions, the current study suggests areas for future research to fully understand the impact of ICL on students and to improve the loan policy.

Original languageEnglish (US)
JournalResearch in Higher Education
DOIs
StateAccepted/In press - Jan 1 2019
Externally publishedYes

Fingerprint

loan
income
student
drop-out
South Korea
credit
ability
evidence
education

Keywords

  • Differences-in-differences
  • Financial aid
  • Income contingent loans
  • Student loan policy

ASJC Scopus subject areas

  • Education

Cite this

Evaluating South Korea’s Introduction of an Income Contingent Loan Program. / Kim, Jeongeun; Wiederspan, Mark.

In: Research in Higher Education, 01.01.2019.

Research output: Contribution to journalArticle

@article{ae6e3e8b5b15468da54f4cf83700cd91,
title = "Evaluating South Korea’s Introduction of an Income Contingent Loan Program",
abstract = "In 2010, South Korea introduced a new student loan program that was income contingent (ICL). One of the main expected outcomes of the new loan program was to provide credit-constrained students the ability to focus on their college education rather than having to work while enrolled. To this end, this study investigates the effect of ICL on college attendance as well as two first year outcomes, including students’ dropout or stop-out and working behaviors while enrolled. Using data from the Youth Panel and a difference-in-difference estimation strategy, we analyze whether or not the introduction of this new loan program improved students’ educational outcomes. Our results indicate that ICL’s introduction increased ICL eligible students’ probability of enrolling college. On the other hand, we found insufficient evidence that ICL reduces students working part-time while enrolled in college. While the findings are contrary to the policy intensions, the current study suggests areas for future research to fully understand the impact of ICL on students and to improve the loan policy.",
keywords = "Differences-in-differences, Financial aid, Income contingent loans, Student loan policy",
author = "Jeongeun Kim and Mark Wiederspan",
year = "2019",
month = "1",
day = "1",
doi = "10.1007/s11162-019-09579-3",
language = "English (US)",
journal = "Research in Higher Education",
issn = "0361-0365",
publisher = "Springer Netherlands",

}

TY - JOUR

T1 - Evaluating South Korea’s Introduction of an Income Contingent Loan Program

AU - Kim, Jeongeun

AU - Wiederspan, Mark

PY - 2019/1/1

Y1 - 2019/1/1

N2 - In 2010, South Korea introduced a new student loan program that was income contingent (ICL). One of the main expected outcomes of the new loan program was to provide credit-constrained students the ability to focus on their college education rather than having to work while enrolled. To this end, this study investigates the effect of ICL on college attendance as well as two first year outcomes, including students’ dropout or stop-out and working behaviors while enrolled. Using data from the Youth Panel and a difference-in-difference estimation strategy, we analyze whether or not the introduction of this new loan program improved students’ educational outcomes. Our results indicate that ICL’s introduction increased ICL eligible students’ probability of enrolling college. On the other hand, we found insufficient evidence that ICL reduces students working part-time while enrolled in college. While the findings are contrary to the policy intensions, the current study suggests areas for future research to fully understand the impact of ICL on students and to improve the loan policy.

AB - In 2010, South Korea introduced a new student loan program that was income contingent (ICL). One of the main expected outcomes of the new loan program was to provide credit-constrained students the ability to focus on their college education rather than having to work while enrolled. To this end, this study investigates the effect of ICL on college attendance as well as two first year outcomes, including students’ dropout or stop-out and working behaviors while enrolled. Using data from the Youth Panel and a difference-in-difference estimation strategy, we analyze whether or not the introduction of this new loan program improved students’ educational outcomes. Our results indicate that ICL’s introduction increased ICL eligible students’ probability of enrolling college. On the other hand, we found insufficient evidence that ICL reduces students working part-time while enrolled in college. While the findings are contrary to the policy intensions, the current study suggests areas for future research to fully understand the impact of ICL on students and to improve the loan policy.

KW - Differences-in-differences

KW - Financial aid

KW - Income contingent loans

KW - Student loan policy

UR - http://www.scopus.com/inward/record.url?scp=85074614161&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=85074614161&partnerID=8YFLogxK

U2 - 10.1007/s11162-019-09579-3

DO - 10.1007/s11162-019-09579-3

M3 - Article

AN - SCOPUS:85074614161

JO - Research in Higher Education

JF - Research in Higher Education

SN - 0361-0365

ER -