Previous econometrics studies of the relation between undergraduate debt and post-baccalaureate activity specify a single equation in which the level of debt is an exogenous determinant of the activity. In general, these analyses do not find an inverse relation between debt and the activity. In contrast to earlier work the estimates from the multi-equation model developed in this paper do show that an increase in expected educational debt significantly reduces the probability that a student expects to enroll in a post-baccalaureate program. I also find that there is no relationship between an unexpected difference of actual and expected debt and a difference of expected and actual post-baccalaureate activity.
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William C. Weiler (1994) studied this question.
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