Abstract
We find that graduates from universities that remove student loans from their financial aid policies are more likely to start entrepreneurial ventures and are more likely to subsequently get venture capital (VC) backing, particularly by reputed VCs, and get higher VC investment. Such ventures have higher sales and employment five years after founding. Our results are stronger for universities with higher tuition and greater extent of R&D activity. Overall, our results document a significant adverse effect of student loans on a crucial engine of economic growth - high impact, venture capital backed startups.
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