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Discussion Paper
Credit Score Impacts from Past Due Student Loan Payments
Mangrum, Daniel; Wang, Crystal (2025-03-26)
In our companion post, we highlighted how the pandemic and subsequent policy actions disrupted trends in the growth of student loan balances, the pace of repayment, and the classification of delinquent loans. In this post, we discuss how these changes affected the credit scores of student loan borrowers and how the return of negative reporting of past due balances will impact the credit standing of student loan borrowers. We estimate that more than nine million student loan borrowers will face significant drops in credit score once delinquencies appear on credit reports in the first half of ...
Liberty Street Economics , Paper 20250326b

Working Paper
A Tale of Two Bailouts: Effects of TARP and PPP on Subprime Consumer Debt
Berger, Allen N.; Roman, Raluca; Epouhe, Onesime (2021-09-23)
High levels of subprime consumer debt can create social problems. We test the effects of the Troubled Asset Relief Program (TARP) and Paycheck Protection Program (PPP) bailouts during the Global Financial Crisis and COVID-19 crisis, respectively, on this debt. We use over 11 million credit bureau observations of individual consumer debt combined with banking, bailout, and local market data. We find that subprime consumers with more TARP institutions in their markets had significantly increased debt burdens following these bailouts. In contrast, PPP bailouts were associated with reduced ...
Working Papers , Paper 21-32

Discussion Paper
Could Rising Household Debt Undercut China’s Economy?
Clark, Hunter L.; Dawson, Jeffrey B. (2019-02-13)
Although there has been a notable deceleration in the pace of credit growth recently, the run-up in debt in China has been eye-popping, accounting for more than 60 percent of all new credit created globally over the past ten years. Rising nonfinancial sector debt was driven initially by an increase in corporate borrowing, which surged in 2009 in response to the global financial crisis. The most recent leg of China’s credit boom has been due to an important shift toward household lending. To better understand the rise in household debt in China and its implications for financial stability ...
Liberty Street Economics , Paper 20190213

Ready for the Pandemic? Household Debt before the COVID-19 Shock
Famiglietti, Matthew; Garriga, Carlos (2020-05-13)
Before the pandemic, shares of delinquencies had already been growing in consumer finance loans, credit card debt, student loans and auto loans. And delinquencies can vary greatly among states.
On the Economy

Newsletter
The dynamic relationship between global debt and output
Beetz Fenske, Caroline; Zhang, Jing; Kim, Yun Jung (2021-05-04)
Given the ramifications of indebtedness for global growth, researchers and policymakers are keenly interested in the mechanisms underlying the linkages between debt and economic output. In our research, summarized in this article, we find that a debt shock adversely affects future economic output, and the impact is most pronounced in developing countries and in countries with a fixed exchange rate regime. This information and related results from the study are useful for policymakers considering appropriate levels of debt as well as an exchange rate regime that is most conducive to economic ...
Chicago Fed Letter , Issue 457 , Pages 5

Working Paper
The Relationship between Debt and Output
Zhang, Jing; Kim, Yun Jung (2020-11-19)
In this paper we empirically explore the relationship between debt and output in a panel of 72 countries over the period 1970–2014 using a vector autoregression (VAR). We document two puzzling empirical findings that contrast with what is predicted by a standard small open economy model by Aguiar and Gopinath (2007), where debt and output endogenously respond to total factor productivity (TFP) shocks. First, developing countries’ debt falls after a positive output shock, while the model predicts a debt expansion. Second, output declines in developed and developing countries after a debt ...
Working Paper Series , Paper WP-2020-30

Working Paper
Asset Pledgeability and Endogenously Leveraged Bubbles
Phan, Toan; Bengui, Julien (2018-04-19)
We develop a simple model of defaultable debt and rational bubbles in the price of an asset, which can be pledged as collateral in a competitive credit pool. When the asset pledgeability is low, the down payment is high, and bubble investment is unleveraged, as in a standard rational bubble model. When the pledgeability is high, the down payment is low, making it easier for leveraged borrowers to invest in the bubbly asset. As loans are packaged together into a competitive pool, the pricing of individual default risk may facilitate risk-taking. In equilibrium, credit-constrained borrowers may ...
Working Paper , Paper 18-11

Discussion Paper
Who Pays What First? Debt Prioritization during the COVID Pandemic
Plosser, Matthew; Conway, Jacob; Arnesen, William J. (2021-03-29)
Since the depths of the Great Recession, household debt has increased from a low of $11 trillion in 2013 to more than $14 trillion in 2020 (see the New York Fed Household Debt and Credit Report). In this post, we examine how consumers’ repayment priorities have evolved over that time. Specifically, we seek to answer the following question: When consumers repay some but not all of their loans, which types do they choose to keep paying and which do they fall behind on?
Liberty Street Economics , Paper 20210329

Newsletter
What are the consequences of missed payments on consumer debts?
Lanning, Jonathan; Rose, Jonathan D. (2020-05-11)
In order to understand better how the unfolding economic crisis is likely to affect U.S. households, this Chicago Fed Letter looks at what happens when borrowers miss debt payments and how long it takes for them to face a severe adverse consequence, such as foreclosure, wage garnishment, or repossession.
Chicago Fed Letter , Issue 437 , Pages 8

Discussion Paper
Student Loan Balance and Repayment Trends Since the Pandemic Disruption
Mangrum, Daniel; Wang, Crystal (2025-03-26)
This month marks five years since the start of the COVID-19 pandemic, after which subsequent policy responses upended most trends underlying student loans in the U.S. Beginning in March 2020, executive and legislative actions suspended student loan payments and the accumulation of interest for loans owned by the federal government. In addition, federal actions marked all past due and defaulted federal student loans as current, driving the delinquency rate on student loans below 1 percent by November 2022. Payments on federal student loans resumed in October 2023 after forty-three months of ...
Liberty Street Economics , Paper 20250326a

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