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Michael F. Lovenheim

Rajashri Chakrabarti, Nicole Gorton, Michael F. Lovenheim.

Most public colleges and universities rely heavily on state financial support. As state budgets have tightened in recent decades, appropriations for higher education have declined substantially. Despite concerns expressed by policymakers and scholars that the declines in state support have reduced the return to education investment for public sector students, little evidence exists that can identify the causal effect of these funds on long-run outcomes. We present the first such analysis in the literature using new data that leverages the merger of two rich datasets: consumer credit records from the New York Fed's Consumer Credit Panel (CCP), sourced from Equifax, and administrative college enrollment and attainment data from the National Student Clearinghouse. We overcome identification concerns related to the endogeneity of state appropriation variation using an instrument that interacts the baseline share of total revenue that comes from state appropriations at each public institution with yearly variation in state-level appropriations. Our analysis is conducted separately for two-year and four-year students, and we analyze individuals into their mid-30s. For four-year students, we find that state appropriation increases lead to substantially lower student debt originations. They also react to appropriation increases by shortening their time to degree, but we find little effect on other outcomes. In the two-year sector, state appropriation increases lead to more collegiate and post-collegiate educational attainment, more educational debt consistent with the increased educational attainment, but lower likelihood of delinquency and default. State support also leads to more car and home ownership with lower adverse debt outcomes, and these students experience substantial increases in their credit score and in the affluence of the neighborhood in which they live. Examining mechanisms, we find state appropriations are passed on to students in the form of lower tuition in the four-year sector with no institutional spending response. For community colleges, we find evidence of both price and quality mechanisms, the latter captured in higher educational resources in key spending categories. These results are consistent with the different pattern of effects we document in the four-year and two-year sectors. Our results underscore the importance of state support for higher education in driving student debt outcomes and the long-run returns to postsecondary investments that students experience.

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Riley Acton, Scott Imberman, Michael F. Lovenheim.

Social programs and mandates are usually studied in isolation even though they often interact closely with each other. Given the immense recent changes to health insurance systems, there is much potential for spillover effects to other systems in which health plays a large role. In this study, we examine how health insurance interacts with education, specifically the education of students with disabilities. We present the first analysis in the literature of how a mandate for health insurers to cover therapy for Autism Spectrum Disorder (ASD) up to age 18 affects educational services received by, and test scores of, students with ASD. A key aspect of the mandate is that children covered by Medicaid aged out of benefits quickly (by age 6), leaving them with a far weaker benefit than children covered by private insurance. Since we do not observe insurance status directly, we proxy for private insurance coverage using ineligibility for free/reduced-price lunch (FRPL) and estimate impacts on identification with ASD, special education services, and achievement through a series of difference-in-differences and triple difference models. We find little evidence of an overall shift in ASD identification, but we do find substantial crowd-out of special education services for students with ASD from the mandate. The stronger mandate led to increased mainstreaming of students in general education classrooms and a reduction in special education support services like teacher consultants. Girls in particular are more likely to be mainstreamed. There is little evidence of changes in achievement, which supports our interpretation of the service reductions as crowd-out.

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