Trends in Student Loan Repayment

Rajeev Darolia, Tomás Monarrez and Lesley J. Turner

National Tax Journal, 2024, vol. 77, issue 3, 681 - 710

Abstract: We document changes in the rate at which borrowers repay their student loans by calculating a borrower-level loan paydown rate — the percentage change in outstanding debt relative to debt at repayment entry. The typical borrower entering repayment in 2005 repaid 26 percent of their loan within five years versus 5 percent for the typical borrower entering repayment in 2014. Paydown rate declines vary by educational attainment, school type, outstanding debt at repayment entry, and repayment plan. Shifts in repayment plan and debt can explain some of the shift in the distribution of paydown rates over time, but most remains unexplained.

Date: 2024
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