Publications
Publications
- Forthcoming
- Journal of Finance
Second Chance: Life with Less Student Debt
By: Marco Di Maggio, Ankit Kalda and Vincent Yao
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).