Education Financing and Student Lending

Amromin, Gene; Eberly, Janice

doi:10.1146/annurev-financial-121415-033040

Cited by 22 publications

(13 citation statements)

References 57 publications

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“…These policies varied substantially over time and are discussed in section IX. Amromin and Eberly (2016) provide a further discussion of many institutional features of federal student loan programs.…”

Section: Student Loansmentioning

confidence: 99%

The consequences of student loan credit expansions: Evidence from three decades of default cycles

Looney

Yannelis

2022

Journal of Financial Economics

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This paper studies the link between credit availability and student loan repayment using administrative federal student loan data. We demonstrate that expansions and contractions in federal student loan credit to institutions with high default rates explain most of the time series variation in student loan defaults between 1980 and 2010. Expansions in loan eligibility between 1976 and 1988 led to the entry of new, high-risk institutions, and default rates exceeding 30 percent in the late 1980s. Credit access was subsequently tightened through strict institutional and student accountability measures. This contracted credit availability at the highest default rate institutions, which in turn caused an exodus of institutions with high default rates, resulting in lower default rates on student loans. After 1992, the cycle was repeated, with credit access gradually loosened by unwinding many of the pre-1992 reforms. We confirm this time series narrative by examining discrete policy changes governing access to credit to show that tightening credit supply led to the closure of high-default schools and the relaxation of accountability rules resulted in their expansion. Our estimates imply that 85% of the increase in default between 1980 and 1990, and 95% of the decrease in default between 1990 and 2000 is driven by schools entering and exiting loan programs. One-third of the recent increase in default is associated with the entry of online programs following the relaxation of rules for lending to online schools, and another third is associated with the abolition of rules limiting the share of revenue coming from federal programs.

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Section: Student Loansmentioning

confidence: 99%

The consequences of student loan credit expansions: Evidence from three decades of default cycles

Looney

Yannelis

2022

Journal of Financial Economics

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“…5 Borrowing limits vary by class level, and are higher for upper level and graduate students. Loans are serviced by private companies, with contracts from the Department of Education (Amromin and Eberly, 2016). If borrowers default on their loans, 15% of their their wages are garnished.…”

Section: Institutional Backgroundmentioning

confidence: 99%

The Distributional Effects of Student Loan Forgiveness

Catherine

Yannelis

2020

SSRN Journal

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We study the distributional consequences of student debt forgiveness in present value terms, accounting for differences in repayment behavior across the earnings distribution.Full or partial forgiveness is regressive because high earners took larger loans, but also because, for low earners, balances greatly overstate present values. Consequently, forgiveness would benefit the top decile as much as the bottom three deciles combined. Blacks and Hispanics would also benefit substantially less than balances suggest. Enrolling households who would benefit from income-driven repayment is the least expensive and most progressive policy we consider.

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“…Significant student debt forgiveness also exists under current programs for public sector employees, teachers and for borrowers in income-driven repayment plans for more then twenty years. Amromin and Eberly (2016) and Avery and Turner (2012) provide a review of work on student loans.…”

Section: Introductionmentioning

confidence: 99%