This paper studies the labor market returns to a state guaranteed loan (SGL) used to
finance university degrees. Using administrative data from Chile and a regression discontinuity
design, we show that nine years after high school graduation students who enrolled at a
university thanks to the SGL attended it for 5 years, foregoing 3 years of vocational education
and accumulating additional 14 thousand dollars in student debt. Strikingly, these students
do not benefit in terms wages, employment, type of contract, or type of employer. The low
quality of institutions attended by loan users may account for these results.