Speaker: Emiel Jerphanion, Tilburg University
"I show that an expansion of student loan supply affects parents’ saving decisionsand portfolio allocation. By exploiting policy-induced variation on expected studentaid, I find a 2.2 pp increase in the parental saving rate, from 4.9% to 6.1%. Themechanism that drives this result is the positive effect of student aid on students’ collegeenrollment. Consistent with this interpretation, I find a disproportionate increase incollege enrollment for children of families affected by the reform. The positive savingresponse is largest among lower- and middle-income families and for parents with strongsaving preferences. A placebo test validates that the effect is absent in families withoutchildren. Moreover, I show that affected parents shift the allocation of saving flowstowards riskier assets."