Abstract
The decision to pursue a tertiary education degree can be seen as an investment decision. The decision involves taking up or not a student loan to pay for the higher education degree. This investment decision can be evaluated in a standard net present worth/internal rate of return (IRR) analysis. With uncertain outcomes the net present worth analysis is generally evaluated in a mean (or most likely) scenario, complemented with a sensitivity or risk analysis. We apply a quantile regression technique to provide a simple but powerful analysis of risk-return investment decisions, using the case of student loans in Brazil (FIES) as an illustration. While mean net present worth/IRR for paying for higher education degree with a student loan is positive, the IRR differ by a factor of 30 between high and low wage university degrees wage earners and some women and non-white degree holders.
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Nascimento, F.A., Ribeiro, E.P. (2019). Conditional Risk and Return in Investment Valuation: An Application to Enrolling in a Higher Education Degree Decision. In: Mula, J., Barbastefano, R., Díaz-Madroñero, M., Poler, R. (eds) New Global Perspectives on Industrial Engineering and Management. Lecture Notes in Management and Industrial Engineering. Springer, Cham. https://doi.org/10.1007/978-3-319-93488-4_13
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DOI: https://doi.org/10.1007/978-3-319-93488-4_13
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