Predicting Student Loan Defaults

Flint, Thomas A.

doi:10.2307/2960044

Cited by 38 publications

(58 citation statements)

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“…The lack of college dropouts and students with less than four-year degrees is unfortunate, since previous research shows that repayment problems are most common among these individuals. 5 Still, we find that many students who graduated from college in 1992-93 have experienced repayment problems.…”

Section: Data: the Baccalaureate And Beyond Longitudinal Studymentioning

confidence: 77%

“…As the first row in Table 3 shows, of the $9,300 initially borrowed, students still owed 19%, on average, 10 years later. Column (5) reports the fraction of borrowers in default, while column (6) reports a broader measure of nonpayment that includes borrowers in deferment, forbearance, or default. In our sample, 5.8% of all borrowers were in default 10 years after finishing college, while 8.3% were not making payments for various reasons (i.e., deferment, forbearance, or default).…”

Section: The Remaining Columns Inmentioning

confidence: 99%

“…Unfortunately, much of this discussion is occurring amidst scant systematic evidence on the determinants of student loan repayment and default, especially for recent cohorts. Dynarski (1994), Flint (1997), and Volkwein et al (1998) study the determinants of student loan default using nationally representative data from the 1987 National Postsecondary Student Aid Study that surveyed borrowers leaving school in the late 1970s and 1980s. Other empirical studies have generally examined default behavior at specific institutions or in individual states in the United States.…”

Section: Introductionmentioning

confidence: 99%

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Default and Repayment among Baccalaureate Degree Earners

Lochner¹,

Monge‐Naranjo²

2015

Student Loans and the Dynamics of Debt

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We thank Brian Greaney for his excellent research assistance and Brian Jacob and other participants at the Conference on Student Loans for their comments. We would also like to thank the Institute of Education and Sciences at the U.S Department of Education for providing us access to the data. The research results and conclusions are ours and do not necessarily reflects the views of the U.S Department of Education. This paper has been screened to insure that no confidential data are revealed. The views expressed are those of the individual authors and do not necessarily reflect official positions of the Federal Reserve Bank of St. Louis, the Federal Reserve System, the Board of Governors, or the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peerreviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

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Section: Data: the Baccalaureate And Beyond Longitudinal Studymentioning

confidence: 77%

Section: The Remaining Columns Inmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Default and Repayment among Baccalaureate Degree Earners

Lochner¹,

Monge‐Naranjo²

2015

Student Loans and the Dynamics of Debt

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“…Much of the literature is based on studies of default from more than 30 years ago. For example, Dynarski (1994), Flint (1997), and Volkwein et al (1998) study the determinants of student loan default using nationally representative data from the 1987 NPSAS that surveyed borrowers leaving school in the late 1970s and 1980s. 39 Gross et al (2009) provide a recent review of this literature.…”

Section: Do Some Students Borrow Too Much?mentioning

confidence: 99%

Student Loans and Repayment: Theory, Evidence and Policy

Monge‐Naranjo¹,

Lochner²

2014

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Rising costs of and returns to college have led to sizeable increases in the demand for student loans in many countries. In the U.S., student loan default rates have also risen for recent cohorts as labor market uncertainty and debt levels have increased. We discuss these trends as well as recent evidence on the extent to which students are able to obtain enough credit for college and the extent to which they are able to repay their student debts after. We then discuss optimal student credit arrangements that balance three important objectives: (i) providing credit for students to access college and finance consumption while in school, (ii) providing insurance against uncertain adverse schooling or post-school labor market outcomes in the form of income-contingent repayments, and (iii) providing incentives for student borrowers to honor their loan obligations (in expectation) when information and commitment frictions are present. Specifically, we develop a two-period educational investment model with uncertainty and show how student loan contracts can be designed to optimally address incentive problems related to moral hazard, costly income verification, and limited commitment by the borrower. We also survey other research related to the optimal design of student loan contracts in imperfect markets. Finally, we provide practical policy guidance for redesigning student loan programs to more efficiently provide insurance while addressing information and commitment frictions in the market.

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“…The CSLP services all provinces and territories in Canada except Quebec. In 2011-12, the CSLP provided loans to 447,000 full-time students(Employment and Social Development Canada, 2016).5 Several previous American and Canadian studies document higher rates of non-payment among low-earners(Dynarski, 1994;Flint, 1997;Lochner and Monge-Naranjo, 2015;Schwartz and Finnie, 2002). SeeGross et al (2009) for a recent survey.6 Similar concerns have also been raised in the U.S., where the Treasury Department estimated that only 20% of all Direct Loan borrowers eligible for income-based repayment plans in 2012 were actually enrolled (Government Accountability Office, 2015).7 Of course, most borrowers may be initially uninformed about their repayment options, choosing to become informed about repayment assistance only when necessary.…”

mentioning

confidence: 99%

Parental Support, Savings and Student Loan Repayment

Lochner¹,

Stinebrickner²,

Suleymanoglu³

2018

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Using unique survey and administrative data from the Canada Student Loans Program, we document that parental support and personal savings substantially lower student loan repayment problems. We develop a theoretical model for studying student borrowing and repayment in the presence of risky labor market outcomes, moral hazard, and costly earnings verification. This framework demonstrates that non-monetary costs of applying for income-based repayment assistance are critical to understanding why resources other than earnings lead to greater repayment. We further show that eliminating these non-monetary costs may be inefficient and lead to undesirable redistribution. Empirically, we demonstrate that expanding Canada's incomebased Repayment Assistance Plan to automatically cover all borrowers would likely reduce program revenue by nearly one-half over early years of repayment. Finally, we show how student loan programs can be more efficiently designed to address heterogeneity in parental transfers in the presence of non-monetary earnings verification costs and moral hazard.

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Predicting Student Loan Defaults

Cited by 38 publications

References 0 publications

Default and Repayment among Baccalaureate Degree Earners

Default and Repayment among Baccalaureate Degree Earners

Student Loans and Repayment: Theory, Evidence and Policy

Parental Support, Savings and Student Loan Repayment

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