The Self-perpetuating Student Loan Debt Crisis

David Carson Jinkins*

*Corresponding author for this work

Research output: Contribution to journalJournal articleResearchpeer-review

Abstract

Student loan debt has grown quickly over the last decade to become the largest category of non-housing debt among American households. Several prominent politicians have advocated cancelling all student loan debt. In this paper I argue that the possibility of debt cancellation has made borrowers hesitant to pay back their debt, further exacerbating the crisis and leading to more political support for debt cancellation. In a simple calibration targeting the growth of student loan debt from 2003-2018, I find that the probability of student loan debt cancellation is 28.5%.
Original languageEnglish
JournalEconomics Bulletin
Volume40
Issue number3
Pages (from-to)2380-2387
Number of pages8
ISSN1545-2921
Publication statusPublished - 2020

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