Q&A: Associate Professor Lesley Turner on How Americans Pay for Education

Lesley Turner joined the University of Chicago Harris School of Public Policy as an associate professor on July 1. Her research broadly considers the roles that government should play in providing, financing, and regulating education markets, with recent work focusing on student loans, examining how students decide the amount to borrow and how to repay their loans.

Prior to joining Harris, Turner was an Associate Professor of Economics at Vanderbilt University and an Assistant Professor of Economics at the University of Maryland. She is a faculty research fellow of the National Bureau of Economic Research and CESifo research affiliate.

She joins three other new faculty for the 2023-24 Academic Year. 

The following is edited from a recent conversation with Turner. 

Can you tell us about one of your recent research studies?  

My co-authors and I took a comprehensive look at the Grad PLUS loan program, which was established in 2006 and dramatically expanded loan limits for graduate students by allowing them to borrow up to the total cost of attendance. We sought to determine whether this program helped increase access and success.  We also examined whether the program affected institutional behavior, namely pricing decisions. Unfortunately, we found that Grad PLUS led graduate students to borrow more and shift away from private loans towards federal loans. While more protections exist for federal loan borrowers, we do not find evidence that the program had other the hoped-for effects. It did not, for instance, increase overall enrollment or enrollment among students who are traditionally underrepresented in graduate education. Nor did this expansion in graduate loan limits increase persistence or degree receipt. Disappointingly, however, we did find some evidence that it led to higher prices.

Are these findings consistent across all categories of students? And across multiple loan programs?

No, these findings are specific to graduate student loans. Undergraduate loan limits were also expanded around the same time, and in a separate study, my coauthors and I find a very different story with those. When undergraduate students who have maxed out their loans receive access to additional liquidity due to higher federal loan limits, we see substantial increases in graduation rates and large increases in later earnings. Interestingly, our findings suggest that these students are also better able to keep up with their student loan payments than those who faced lower loan limits and took on less debt as these students who had significantly lower student loan default rates. Finally, in contrast to some other studies, these students’ homeownership rates were unaffected. There appears to be a big difference between borrowing more because tuition is higher versus borrowing more because of access to more funds. In the second case, which is what we looked at, a student has more resources on hand that can be devoted to their education.  This seems to offer real benefits.   

What have you learned about borrowing to attend community college?

My co-author and I discovered that about half of community colleges were not being as clear as they could have been about loan options, and that this has important implications.

For this project, we worked with a community college to do a field experiment where we randomly assigned the way that loan options were presented to students when they were notified about their financial aid and their costs of college. Importantly, students’ eligibility for loans and the process through which they requested student loans were held constant, so this was purely a change in the way that information was provided at the point in time when a student is deciding whether and how much to borrow. We found that when a student had a loan listed on their award letter, they were more likely to borrow. And surprisingly, we found that when students were nudged into taking a relatively small loan, they earned more credits, had higher GPAs, and were more likely to transfer to a four-year public institution.   

Ultimately, this is a very important thing for us to understand. Contrary to concerns about overborrowing among this student population, we learned that many community college students don't borrow, even though many would benefit from these additional financial resources.

There have been many recent efforts to increase higher ed accountability, most often due to concerns about student loan debt and repayment difficulties among those who attended for-profit institutions. But one concern is that students who would attend these institutions would end up being shut out of higher education if they are closed. What do we know about what would happen to the students who would have gone to these for-profit institutions?

My coauthors and I looked back to the last major push towards accountability in higher education, which imposed sanctions on for-profit institutions with very high student loan default rates. We looked at what happened to enrollment in what were likely the closest competitors to sanctioned for-profit institutions: nearby community colleges. As is the case today, community colleges have substantial overlap in the programs they offer, serve similar student bodies, but have very different costs compared to for-profit institutions. We found that most students who would have enrolled in these for-profits had they not been sanctioned, ended up enrolling in community colleges instead. As a result, they took on less student loan debt, and they were less likely to default on their loans. And interestingly, we found evidence of “reputational spillovers”— nearby for-profits that had not been sanctioned were still more likely to preemptively leave the federal student aid system, especially if they offered similar programs to for-profits that were sanctioned. Our findings suggest that there are close substitutes for these institutions that tend to not produce very good outcomes and that even the threat of sanctions can affect these institutions' willingness to continue to offer loans to students.

What else have you found on the impacts of aid and loans?

I’ve examined how additional financial aid affects outcomes of the lowest-income Pell Grant recipients. A number of papers find evidence that Pell Grant aid does little to alter students decisions of whether or where to attend college, despite being one of the largest need-based financial aid programs in the US.–I In stark contrast to these other academic studies, my coauthors and I find that additional Pell Grant aid has large positive effects on persistence, degree receipt, and on earnings among this relatively disadvantaged population. In fact, our findings suggest that the increase in Pell Grant aid that was given to these students is fully recouped through increases in federal tax dollars within 10 years. Taken together with the other studies I mentioned, our findings suggest that targeting additional grant aid to the lowest income students can have much larger effects on students’ short- and longer-run outcomes. Where those dollars go really matters for increasing student attainment and enhancing future labor market outcomes.

Student loan forgiveness has become a topical political issue, have you worked at all on legislation?

I was Senior Advisor in the Office of the Under Secretary and Chief Economist in 2022 and worked on several of these issues that have been in the news, like student debt relief, accountability, and new loan repayment options. I have since stepped down to a part-time position. I also spent the 2018-19 academic year in a fellowship for the Senate Health Education Labor Pensions committee working on higher education policy. Some of my work around simplifying the federal student aid application was ultimately incorporated into a budget bill that passed which was a proud moment. Through these experiences, I’ve learned a lot about the importance of making academic research accessible to policymakers and how to do so. 

How did you become interested in studying access to higher education?

I grew up in Michigan in a town called Ypsilanti, home to one of the most famous social experiments, the Perry Preschool Project –a six-decade-long seminal research study showing large positive effects of early childhood education that persist for multiple generations. Although I did not learn about this research until college, growing up in Ypsi provided me with important lessons about the disparate opportunities available to low-income children and students of color. I went to a high school where most students didn't go to college, but my parents, like so many others, instilled in me the belief that higher education is the path to mobility and security. I think that ultimately, my decision to pursue a Ph.D. in economics largely stemmed from my belief that research can play a significant role in helping shape the programs and policies that affect families from places like Ypsilanti and continues to inform my research, teaching, and public engagement.

Why did you make the decision to come to Harris?  

I'm very excited to be at a policy school because the main reason I went into this profession was to do research that could help inform policy.

What else should we know about you?

I have two dogs. They are lovely and energetic. They’re basically generic mutts from the south: when all the dogs get together indiscriminately, what pops out is a medium-sized tan, short-haired, generic looking dog, like mine. One is what I call the floppy eared variety, and one is a pointy eared variety.