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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

Working Paper
An Experiment on Information Use in College Student Loan Decisions
Darolia, Rajeev (2016-06-01)
There is ample concern that college students are making ill-informed student loan decisions with potentially negative consequences to themselves and the broader economy. This paper reports the results of a randomized field experiment in which college students are provided salient information about their borrowing choices. The setting is a large flagship public university in the Midwest, and the sample includes all nongraduating students who previously borrowed student loan money (~10,000 students). Half of the students received individually tailored letters with simplified information about ...
Working Papers , Paper 16-18

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

Journal Article
Trouble ahead for student loans?
Hathaway, Ian; Ergungor, O. Emre (2008-05)
The market for student loans may differ in some respects from other financial markets, but private lenders are the primary source of funds. As in other markets, the incentive to lend those funds comes from the ability to make a profit. But recent turmoil in financial markets is affecting all of the factors that contribute to the profitability of student loans, leading to speculation that the availability of such loans will fall.
Economic Commentary , Issue May

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

Working Paper
Student Loans and Homeownership
Sommer, Kamila; Ringo, Daniel R.; Sherlund, Shane M.; Mezza, Alvaro (2016-02-12)
We estimate the effect of student loan debt on subsequent homeownership in a uniquely constructed administrative dataset for a nationally representative cohort. We instrument for the amount of individual student debt using changes to the in-state tuition rate at public 4-year colleges in the student's home state. A $1,000 increase in student loan debt lowers the homeownership rate by about 1.5 percentage points for public 4-year college-goers during their mid 20s, equivalent to an average delay of 2.5 months in attaining homeownership. Validity tests suggest that the results are not ...
Finance and Economics Discussion Series , Paper 2016-10

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
What Americans (Don’t) Know about Student Loan Collections
Brown, Meta; Zafar, Basit; Bleemer, Zachary; Van der Klaauw, Wilbert (2014-06-05)
U.S. student debt has more than tripled since 2004, and at over $1 trillion is now substantially greater than both credit card and auto debt balances. There are substantial potential benefits to be gained from taking out a student loan to fund a college education, including higher earnings and lower unemployment rates for college grads. However, there are significant costs to having student debt: The loans frequently carry relatively high interest rates, delinquency is common and costly (involving potential late fees and collection fees), and the federal government has the power to garnish ...
Liberty Street Economics , Paper 20140605

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