How useful are default rates? Borrowers with large balances and student loan repayment

W. Looney and Constantine Yannelis

Economics of Education Review, 2019, vol. 71, issue C, 135-145

Abstract: We examine the distribution of student loan balances and repayment rates in the United States using administrative student loan data. We show that increases in credit limits and expansions in credit availability resulted in rising borrowing amounts, and that the share of borrowers holding very large balances has surged. For instance, the share of borrowers leaving school with more than $50,000 of federal student debt increased from 2% in 1992 to 17% in 2014. Consequently, a small share of borrowers now owes the majority of loan dollars in the United States. Although these large-balance borrowers have historically had strong labor market outcomes and low rates of default, repayment rates have slowed significantly between 1990 and 2014 reflecting, in part, changes in the characteristics of students, the schools they attended, and the rising amounts borrowed.

Keywords: Student loans; Human capital; Education; Default (search for similar items in EconPapers)
JEL-codes: D14 E24 G28 H52 H81 I23 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecoedu:v:71:y:2019:i:c:p:135-145

DOI: 10.1016/j.econedurev.2018.10.004

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