Student Loans, Employment Readiness, and Labor Market Outcomes

Abstract

We study whether student debt impacts individuals’ ability to adequately prepare for the labor market. Using no-loans financial aid policies as an exogenous shock to student loans, we find that student loans negatively impact students’ ability to have an internship that is related to the students chosen major. Internships are also shown to be positively associated with the likelihood of finding a job, the likelihood of finding employment in a related field of study, and job satisfaction. Student debt similarly dampens the positive effects of mentoring, professor support, and the school’s effort to prepare students for the labor market.