The Effect of Undergraduate Student Loans on the Decision to Pursue Postbaccalaureate Study

Previous research on the demand for graduate study has not focused on the effect of undergraduate indebtedness on individual decisions to pursue a graduate degree. In this article, a modified version of the approach typically used to analyze the transition from high school to college is used to study this effect. Estimates indicate that the level of undergraduate debt is not a significant factor in determining a student’s choice of whether to enter the labor market or continue his or her education. However, this result is subject to qualifications related to the way choices facing students had to be specified, given available data.