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Rising student loan default rates and protests over debt suggest that many students make college enrollment and financing choices they regret. Policymakers have considered tying the availability of federally subsidized loans at degree programs to financial outcomes for past students. This paper considers the implementation of such a policy in Chile. We describe how loan repayment varied by degree type at baseline, the design of the loan reform, and how earnings-based loan caps change availability of loans and incentives for students and higher education institutions. We discuss the challenges facing policymakers seeking to link loan availability to earnings outcomes. [ABSTRACT FROM AUTHOR]

This paper uses the 1996-2001 National Socioeconomic Survey panel database to analyse poverty dynamics in Chile, drawing a distinction between chronic and transient poverty. We found that while 20 per cent of the population was living below the official poverty line both in 1996 and 2001, only 9 per cent of the population was poor at both dates. We also found that when the poverty line was raised, the amount of households which could be considered chronically poor rose steadily, whereas the transitory component of poverty remained more or less stable. Analysis of the direct reasons for changes in household poverty status leads us to the conclusion that labour dynamics are far more relevant than demographic changes. Household heads who suffered health problems are significantly less likely to leave poverty. Household human and physical capital are also relevant, as well as the sector in which the household head works. Simulating this exercise using different poverty lines reveals that some variables are not robust to changes in the definition of poverty, while others which originally appeared to be insignificant become so for most other possible poverty lines. [ABSTRACT FROM AUTHOR]