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IZA Discussion Paper No. 11142
November 2017
Graduation Incentives Through Conditional Student Loan Forgiveness
Ulla Hämäläinen, Kristian Koerselman, Roope Uusitalo

We evaluate a Finnish student financing reform which created substantial financial incentives for on-time graduation, and had the side effect of turning expected nominal interest rates on student loans strongly negative. We find that both the timing of graduation and the take-up of loans remained unaffected by the reform. This is consistent with earlier findings in the literature that students do not seem to process financial incentives well when framed as a loan.

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Mark Fallak
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Olga Nottmeyer
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+352 585-855-501
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Christina Gathmann
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The IZA@LISER Network is a global community of scholars dedicated to excellence in labor economics and related fields, now coordinated at the Luxembourg Institute of Socio-Economic Research (LISER) following its transition from Bonn.

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