Figure 3 plots estimates of the marginal effect of student loan debt against the borrower’s age for several different specifications, along with 95% and 90% confidence intervals robust to clustering at the home state level
This table reports second-stage instrumental variable probit estimates of the effect of student loans on the probability of becoming a homeowner by age 26
This table reports second-stage instrumental variable probit estimates of the effect of student loans on the probability of becoming a homeowner by age 26
This table reports second-stage instrumental variable probit estimates of the effect of student loans on the probability of becoming a homeowner by age 26
This table reports second-stage instrumental variable probit estimates of the effect of student loans on the probability of becoming a homeowner by age 26
This table reports second-stage instrumental variable probit estimates of the effect of student loans on the probability of becoming a homeowner by age 26
This table reports second-stage instrumental variable probit estimates of the effect of student loans on the probability of becoming a homeowner by age 26
This table reports second-stage instrumental variable probit estimates of the effect of student loans on the probability of becoming a homeowner by age 26
This table reports second-stage instrumental variable probit estimates of the effect of student loans on the probability of becoming a homeowner by age 26
This table reports second-stage instrumental variable probit estimates of the effect of student loans on the probability of becoming a homeowner by age 26
This table reports second-stage instrumental variable probit estimates of the effect of student loans on the probability of becoming a homeowner by age 26
This table reports second-stage instrumental variable probit estimates of the effect of student loans on the probability of becoming a homeowner by age 26
This table reports second-stage instrumental variable probit estimates of the effect of student loans on the probability of becoming a homeowner by age 26
| Variable | Probability of Homeownership by Age 26 | ||||||
|---|---|---|---|---|---|---|---|
| Full Sample | No Pell(6) | PSE Only(7) | |||||
| (1) | (2) | (3) | (4) | (5) | |||
| Student loans disbursed | ?.023* | ?.016* | ?.013 | ?.013 | ?.013 | ?.018* | ?.020* |
| (.014) | (.008) | (.009) | (.008) | (.009) | (.009) | (.012) | |
| Tuition | .004 | ?.000 | .001 | .001 | |||
| (.003) | (.001) | (.003) | (.003) | ||||
| Ever public 4 year | .221*** | .081** | .062* | .061* | .063* | .062** | .086* |
| (.078) | (.033) | (.035) | (.035) | (.037) | (.028) | (.046) | |
| No college | ?.088*** | ?.077*** | ?.077*** | ?.080*** | ?.105*** | ||
| (.016) | (.016) | (.016) | (.017) | (.025) | |||
| Associate’s/certificate | .157*** | .156*** | .156*** | .161*** | .175*** | .145*** | |
| (.032) | (.031) | (.031) | (.030) | (.037) | (.045) | ||
| Bachelor’s | .224*** | .226*** | .226*** | .233*** | .217*** | .236*** | |
| (.035) | (.037) | (.037) | (.038) | (.032) | (.029) | ||
| Master’s or more | .314*** | .332*** | .331*** | .331*** | .320*** | .339*** | |
| (.080) | (.082) | (.082) | (.080) | (.071) | (.083) | ||
| Degree of unknown type | .236*** | .235*** | .235*** | .235*** | .276*** | .207*** | |
| (.052) | (.048) | (.048) | (.048) | (.058) | (.070) | ||
| Ever public 2 year | ?.046** | ?.027 | ?.027 | ?.031 | ?.034* | ?.047 | |
| ( http://getbadcreditloan.com/payday-loans-ks.018) | (.020) | (.020) | (.021) | (.018) | (.029) | ||
| Ever private 4 year not for profit | .117* | .093 | .093 | .099 | .114* | .148 | |
| (.069) | (.072) | (.072) | (.077) | (.066) | (.101) | ||
| Ever private 2 year not for profit | .085*** | .076* | .076* | .083** | .123*** | .088** | |
| (.031) | (.041) | (.041) | (.042) | (.045) | (.041) | ||
| Ever private for profit | .001 | ?.003 | ?.003 | ?.004 | .057 | .007 | |
| (.022) | (.022) | (.022) | (.024) | (.041) | (.035) | ||
| Ever Pell | .019 | .008 | .008 | .012 | .041 | ||
| (.037) | (.037) | (.037) | (.039) | (.059) | |||
| College major controls | No | Yes | Yes | Yes | Yes | Yes | Yes |
| Home state economic controls | No | No | No | Yes | No | No | No |
| Home state and cohort fixed effects | No | No | Yes | Yes | No | No | No |
| Home statebycohort fixed effects | No | No | No | No | Yes | Yes | Yes |
| Observations | 33,435 | 33,435 | 33,435 | 33,435 | 33,310 | 26,399 | 17,927 |
Note. Student loans are instrumented for using the interaction between tuition and an indicator variable for whether the individual ever attended a public 4-year college before age 23. See Table 1 for variable definitions and Table 3 for sample selection and specification details. Standard errors are in parentheses (clustered at the home state level). PSE = postsecondary education.
While the estimated magnitude of the effect of student loan debt is fairly consistent across specifications through student’s mid-20s to late 20s, statistical significance varies. In our most restrictive specification, using state-by-cohort fixed effects, we cannot reject the null hypothesis (that student loan debt has no effect on homeownership) at conventional significance levels (fig. 3B). However, after discarding students who received Pell Grants (a subgroup whose debt should be less influenced by the instrument), we can reject the null at 10% confidence levels at every year but one from ages 2431, even with the full set of fixed effects (fig. 3C). Fig. 3.
Instrumental variable probit estimates of the marginal effect of student loans on homeownership, by age. This figure plots estimates of the marginal effect of student loan debt on the probability of becoming a homeowner against the borrower’s age for three different specifications. These estimates are derived from the instrumental variable regressions using the vector of controls in column 2 (A), column 5 (B), and column 6 (C) of Table 4. Student loan debt is recorded in thousands of 2014 dollars. Dashed and dotted lines represent 95% and 90% confidence intervals, respectively. Standard errors are adjusted for clustering at the home state level.