The Impact of Student Loan Reform on College Enrollment (Japanese)

This paper examines whether the expansion of applicant eligibility for student loans promotes the college enrollment of high school graduates. Japan Student Services Organization revised the student loan system in 1999, and one of the revisions was the change of eligibility standard based on family income. Before the revision, the requirement income for student loan applicants was higher in the standard level A region than in the level B region (those regions correspond to the first/second level region of the Public Assistance System). After the revision, the eligibility standard in the level B region was adjusted to that of the level A region. This reform makes the exogenous cost reduction of enrollment for high school students who lived in the level B area. We conduct difference-in-differences estimation using municipal data from 1996-2003. Also, we implement triple difference estimation using individual data, because the effect of reform differs by family income within the same region. We find that the expansion of applicant eligibility for student loans improved college enrollment, but the impact becomes limited in just a year after reform.