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  • Forthcoming
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  • Journal of Finance

Second Chance: Life with Less Student Debt

By: Marco Di Maggio, Ankit Kalda and Vincent Yao
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Abstract

This paper examines the effect of student debt relief on individual credit and labor market outcomes. We exploit an episode of plausibly random debt discharge due to the loss of paperwork for thousands of borrowers to examine the effects of private student debt relief on borrower outcomes. We find that borrowers who receive debt relief (treated) experience declines in debt balances and delinquency rates on other accounts and increases in mobility and income relative to those who bear the costs of default like wage garnishment and collections (control). Borrowers in both groups contribute to our findings through different mechanisms. Although we cannot quantify its costs, our results speak to the benefits of loan forgiveness in reducing the consequences of debt burden for defaulted borrowers.

Keywords

Student Debt; Private Student Loans; Legal Settlement; Mobility; Debt Collection; Debt Relief; Personal Finance; Borrowing and Debt; Outcome or Result

Citation

Di Maggio, Marco, Ankit Kalda, and Vincent Yao. "Second Chance: Life with Less Student Debt." Journal of Finance (forthcoming).
  • SSRN

About The Author

Marco Di Maggio

Finance
→More Publications

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More from the Authors
  • Adyen: Reshaping the Payment Ecosystem By: Marco Di Maggio, Antonio Moreno and Elena Corsi
  • Lupoli Companies: Riverwalk - Making an Impact By: Richard S. Ruback, Marco Di Maggio, Dave Habeeb and Ruth Page
  • Ava Labs: Navigating the Next Blockchain By: Marco Di Maggio and Wenyao Sha
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