Macroeconomic Implications of Student Debt: A State-Level Analysis

Berrak Bahadir () and Dora Gicheva
Additional contact information
Berrak Bahadir: Department of Economics, Florida International University

No 2126, Working Papers from Florida International University, Department of Economics

Abstract: This paper investigates the macroeconomic implications of the rise in outstanding student debt in the United States using state-level data for the 2003-2019 period. We show that an increase in the state-level student debt-to-income ratio contributes to lower consumption growth in the medium run. The estimated effects are larger when we use an instrumental variable approach relying on exogenous policy changes including variations in state appropriations for higher education, increases in annual limits for subsidized federal student loans, and federal loan interest rate changes. The instrumental variable results show the hypothetical impact of an increase in student debt without an associated increase in educational attainment. We also find suggestive evidence that expansions in student loans lead to subsequent increases in credit card debt.

Keywords: student loans; household credit; consumption; credit card debt (search for similar items in EconPapers)
JEL-codes: E21 G51 I22 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2021-12
New Economics Papers: this item is included in nep-cwa, nep-fdg and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://economics.fiu.edu/research/pdfs/2021_working_papers/21261.pdf First version, 2021 (application/pdf)

Related works:
Journal Article: Macroeconomic Implications of Student Debt: A State‐Level Analysis (2022)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fiu:wpaper:2126

Access Statistics for this paper

More papers in Working Papers from Florida International University, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Sheng Guo ().