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Our instrumental variable approach relies on the imputation of the subject’s precollege state of residence (henceforth, home state)

Our instrumental variable approach relies on the imputation of the subject’s precollege state of residence (henceforth, home state)

Second, for individuals who neither attended college nor took the SAT, we impute their home states with the first state available in the credit records

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To construct home states, we proceed in four steps. First, for individuals who took the SAT, we use these individuals’ state of legal residence at the time when they took the test, as reported in the College Board data. Fifteen percent of our sample have their home state identified in this manner. A further 28% of the sample have their home state identified in this step. Third, for college attendees who did not take the SAT, we use the state of residence observed in the TransUnion credit records prior to their first enrollment in college, if these data are available. An additional 20% have their home state identified this way. Fourth, for the remaining 37% of the sample-those who enrolled in college prior to their first appearance in the TransUnion credit records-we impute their home state using the state in which the school associated with the first enrollment spell is located. 11

This last step can certainly appear problematic given that it could reflect an endogenous location choice associated with state-level college costs or college quality. However, a case can be made that the state of the first college attended is a reliable indicator of the individual’s home state among the subpopulation that did not take the SAT or appear in credit bureau records prior to attending college. In particular, in the nationally representative 20034 Beginning Postsecondary Students (BPS) Longitudinal Study, only 11% of first-time nonforeign college entrants attended a postsecondary institution not in their state of legal residence, with the state of legal residence defined as the student’s true, fixed, and permanent home. Under this definition, if the student moved into a state for the sole purpose of attending college, that state does not count as the student’s legal residence. 12 These students represent 11% of our total sample of college attendees, accounting for the entire expected population of out-of-state students and suggesting that among the remaining students the state of first college attendance is extremely likely to be their home state. We therefore do not believe that misidentification of home state is a significant issue. 13

Finally, for the remaining 28% of individuals who neither attended college nor took the SAT, we impute their home states with the first state available in the credit records (the average age at which we first observe a state for this group of individuals is 22.6). Public 4-year university tuition rates are assigned to individuals on the basis of their home state, as imputed by the procedure outlined above. The data on the average in-state tuition at public 4-year universities by state and academic year are available from the National Center for Education Statistics. Average in-state tuition reflects the average undergraduate tuition and required fees.

In our sample, 23% of students whose home state was identified by the SAT or their credit record attended an out-of-state postsecondary school

Several filters are applied to the baseline cohort of 34,891 individuals. First, we drop 141 observations for which TransUnion was not able to recover personal identifying information on which to perform the merge. We then drop 40 individuals who were not residing in any of the 50 US states or the District of Columbia before starting college and 6 individuals who we could not match to a home state. Moreover, we drop 698 individuals for whom we were not able to determine the school sectors they attended. Finally, we drop 571 individuals whose earliest enrollment record corresponds to the date a degree was obtained rather than an actual enrollment record. 14 The resulting sample used in the analysis thus contains 33,435 individuals http://getbadcreditloan.com/payday-loans-ms. Summary statistics for the variables we use in this analysis are presented in Table 1.

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