Recently, much attention is paid to the influence of the social loan system for students, introduced in 2015, on their financial certainty. Since the introduction of the new system, the average debt per student has increased, students increasingly live with their parents for longer periods of time, and financial motives such as loan aversion and high study costs play a role in the decreased flow from mbo to hbo.
Frank van Oort, Professor of Applied Economics, Bas Karreman, Associate Professor of Applied Economics and Zhiling Wang, Assistant Professor of Applied Economics, all three working at Erasmus School of Economics, were the first to quantitatively analyse the impact of the social lending system on the choice of study.
Influences on the choice of study
In addition to the direct impact of the loan system on study choice, the interaction with socio-economic background, high school performance, housing location and gender is examined. As a result of the social lending system, access to education should be equal for all. But students from low welfare groups cannot rely on financial support from their parents to repay the loan. Researchers therefore expect them to make different study choices and attach greater value to financial security after finishing their degree. The same expectation applies to students who underperformed in high school. If these students are also expected to lag behind in higher education, this can lead to longer study periods and more study debt, which makes financial security desirable. In the same way, it is expected for prospective students with a limited range of studies in the immediate vicinity that they will more often choose a course of study leading to a higher expected income to compensate for the costs of going to rooms. Finally, the researchers expect that women's choice of study will more often be influenced by a higher starting salary.
Changes compared to the basic scholarship
In spite of the fact that the loan system has been in use in hbo and wo since 2015, the basic scholarship still applies to mbo. In order to measure the effect of the social loan system on the choice of study, the researchers compared the change in study choices of havo and vwo graduates with those of vmbo graduates before and after the introduction of the loan system. The vmbo graduates serve as a control group. It is assumed that if the loan system had not been introduced, the unobserved differences between the three groups would be the same over time.
Havo graduates choose higher starting salaries
The research shows that after the introduction of the social loan system, havo graduates more often opt for study programmes with a high starting salary. No effect is found for vwo graduates. For havo graduates, the change in study choice appears to be related to their parents' income. The choice for studies with a higher starting salary is considerably higher for havo graduates from the low income category compared tot he high income category. Also, lower performing high school students choose more often for studies with a high expected starting salary. The range of educational institutions in the area that offer a course in accordance with the curriculum of the new student also turns out to be relevant to the effect of the loan system on the choice of study. This concerns students who choose a study programme relatively far away from their home town, with longer travel times or higher costs for living in dorm rooms. Finally, women in particular were more likely to choose study programmes with a higher expected starting salary after the introduction of the social loan system.
Although it is not yet possible to determine actual wage differences after the choice of study, since the first graduates under the social loan system have only recently completed their studies, the findings regarding the introduction of the system in line with one of the policy expectations, namely: individual and conscious study choices are more guided by the earning potential of a higher education diploma.