The Insurance Implications of Government Student Loan Repayment Schemes

Martin Gervais, Qian Liu and Lance Lochner

AEA Papers and Proceedings, 2023, vol. 113, 535-40

Abstract: We use new administrative data that link detailed information on Canadian student loan recipients with their repayment and income histories from the Canada Student Loans Program, income tax filings, and postsecondary schooling records to measure the extent to which student borrowers adjust loan repayments to insure against income variation. Loan payments are shown to increase in income, more so in early years and for individuals with higher initial debt. We estimate that on average an unexpected $1,000 change in annual income is associated with a $30 change in loan payment. Loan repayments are also used to absorb persistent income variation.

JEL-codes: G51 H52 I22 I23 I28 (search for similar items in EconPapers)
Date: 2023
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Working Paper: The Insurance Implications of Government Student Loan Repayment Schemes (2022)
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DOI: 10.1257/pandp.20231082

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