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Discussion Paper
Payback Time? Measuring Progress on Student Debt Repayment
Scally, Joelle; Brown, Meta; Lee, Donghoon; Van der Klaauw, Wilbert; Haughwout, Andrew F. (2015-02-20)
Student debt continues to make headlines because of its high balances and high rates of delinquency and default?troubling issues that we discussed in our previous posts this week. A less prominent, but still important, issue is the pace at which former students are?or are not?paying off their debts. This issue is important to borrowers because the longer they take to repay their debts, the more interest they accrue, the longer they have to worry about making payments, and the longer they have to deal with the consequences of unpaid debts. It?s also important to the macroeconomy because longer ...
Liberty Street Economics , Paper 20150220

Report
Student Debt and Default: The Role of For-Profit Colleges
Chakrabarti, Rajashri; Lovenheim, Michael; Armona, Luis (2017-04-01)
For-profit providers have become an important fixture of U.S. higher education markets. Students who attend for-profit institutions take on more educational debt and are more likely to default on their student loans than those attending similarly selective public schools. Because for-profits tend to serve students from more disadvantaged backgrounds, it is important to isolate the causal effect of for-profit enrollment on student debt and repayment outcomes as well as the educational and labor market mechanisms that drive any such effects. We approach this problem using a novel instrument ...
Staff Reports , Paper 811

Report
Tuition, jobs, or housing: what's keeping millennials at home?
Van der Klaauw, Wilbert; Lee, Donghoon; Brown, Meta; Bleemer, Zachary (2014-11-01)
This paper documents marked changes in young Americans? residence choices over the past fifteen years, with recent cohorts delaying homeownership and lingering much longer in parents? households. To understand the sources and implications of this decline in independence, we estimate the contributions of local economic circumstances to the decision to live with parents or independently. Transition models, local aggregates, and state-cohort tuition patterns are used to address the likely presence of individual- and neighborhood-level unobserved heterogeneity. Employment and housing market ...
Staff Reports , Paper 700

Discussion Paper
Who Falters at Student Loan Payback Time?
Chakrabarti, Rajashri; Lovenheim, Michael; Morris, Kevin (2016-09-09)
This is the final post in a four-part series examining the evolution of enrollment, student loans, graduation and default in the higher education market over the course of the past fifteen years. In the first post, we found a marked increase in enrollment of 35 percent between 2000 and 2015, led mostly by the for-profit sector?which increased enrollment by 177 percent. The second post showed that these new enrollees were quite different from the traditional enrollees. Yesterday?s post demonstrated an unprecedented increase in loan origination amounts during this period?nearly tripling between ...
Liberty Street Economics , Paper 20160909

Briefing
The Potential Impact of Public Service Student Loan Forgiveness in the Fifth District
Link, Elizabeth; Romero, Jessica Sackett; Turner, Sarah (2022-08)
The Public Service Loan Forgiveness program offers government and nonprofit workers relief from outstanding federal loans after 10 years of employment. In October 2021, the Department of Education temporarily waived certain requirements, making many public service workers retroactively eligible for loan relief. This waiver expires on Oct. 31, 2022, creating a risk that many eligible beneficiaries will not access benefits. The program may be especially important in the Fifth District, which has a higher share of public service workers than the U.S. as a whole.
Richmond Fed Economic Brief , Volume 22 , Issue 29

Discussion Paper
Racial Disparities in Student Loan Outcomes
Van der Klaauw, Wilbert; Lee, Donghoon; Scally, Joelle; Haughwout, Andrew F. (2019-11-13)
Total household debt balances increased by $92 billion in the third quarter of 2019, according to the latest Quarterly Report on Household Debt and Credit from the New York Fed’s Center for Microeconomic Data. The balance increase reflected nearly across the board gains in various types of debt, with the largest gains of $31 billion in mortgage balances (0.3 percent) and $20 billion in student loan balances (1.4 percent). The Quarterly Report, and the following analysis, are both based on the New York Fed’s Consumer Credit Panel, which is itself based on anonymized Equifax credit report ...
Liberty Street Economics , Paper 20191113a

Working Paper
The Interplay Between Student Loans and Credit Card Debt: Implications for Default in the Great Recession
Ionescu, Felicia; Ionescu, Marius (2014-02-03)
We analyze the interactions between two different forms of unsecured credit and their implications for default behavior of young U.S. households. One type of credit mimics credit cards in the United States and the default option resembles a bankruptcy filing under Chapter 7; the other type of credit mimics student loans in the United States and the default option resembles Chapter 13. In the credit card market a financial intermediary offers a menu of interest rates based on individual default risk, which account for borrowing and repayment behavior in both markets. In the student loan ...
Finance and Economics Discussion Series , Paper 2014-14

Working Paper
Does Salient Financial Information Affect Academic Performance and Borrowing Behavior among College Students?
Schmeiser, Maximilian D.; Stoddard, Christiana; Urban, Carly (2015-09-10)
While rising student loan debt can plague college students future finances, few federal programs have been instituted to educate college students on the mechanics of student loan borrowing. This paper exploits a natural experiment in which some students received "Know Your Debt" letters with incentivized offers for one-on-one financial counseling. Montana State University students who reached a specific debt threshold received these letters; University of Montana students did not. We use a difference-in-difference-in-differences strategy to compare students above and below the thresholds ...
Finance and Economics Discussion Series , Paper 2015-75

Discussion Paper
Just Released: Student Loan Delinquency Rate Defies Overall Downward Trend in Household Debt and Credit Report for Fourth Quarter 2014
Van der Klaauw, Wilbert; Lee, Donghoon; Brown, Meta; Haughwout, Andrew F.; Scally, Joelle (2015-02-17)
Today, the New York Fed released the Quarterly Report on Household Debt and Credit for the fourth quarter of 2014. The report is based on data from the New York Fed’s Consumer Credit Panel, a nationally representative sample drawn from anonymized Equifax credit data. Overall, aggregate balances increased by $117 billion, or 1.0 percent, boosted by increases in all credit types except home equity lines of credit.
Liberty Street Economics , Paper 20150217

Discussion Paper
Looking at Student Loan Defaults through a Larger Window
Lee, Donghoon; Haughwout, Andrew F.; Scally, Joelle; Brown, Meta; Van der Klaauw, Wilbert (2015-02-19)
Most of our previous discussion about high levels of student loan delinquency and default has used static measures of payment status. But it is also instructive to consider the experience of borrowers over the lifetime of their student loans rather than at a point in time. In this second post in our three-part series on student loans, we use the Consumer Credit Panel (CCP), which is itself based on Equifax credit data, to create cohort default rates (CDRs) that are analogous to those produced by the Department of Education but go beyond their three-year window. We find that default rates ...
Liberty Street Economics , Paper 20150219

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