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The Self-Perpetuating Student Loan Debt Crisis

Author

Listed:
  • David Carson Jinkins

    (Copenhagen Business School)

Abstract

Student loan debt has grown quickly over the last decade to become the largest category of non-housing debt among American households. Several prominent politicians have advocated cancelling all student loan debt. In this paper I argue that the possibility of debt cancellation has made borrowers hesitant to pay back their debt, further exacerbating the crisis and leading to more political support for debt cancellation. In a simple calibration targeting the growth of student loan debt from 2003-2018, I find that the probability of student loan debt cancellation is 28.5%.

Suggested Citation

  • David Carson Jinkins, 2020. "The Self-Perpetuating Student Loan Debt Crisis," Economics Bulletin, AccessEcon, vol. 40(3), pages 2380-2387.
    • Handle: RePEc:ebl:ecbull:eb-19-00954
    as

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    References listed on IDEAS

    as
    1. Minicozzi, Alexandra, 2005. "The short term effect of educational debt on job decisions," Economics of Education Review, Elsevier, vol. 24(4), pages 417-430, August.
    2. Rothstein, Jesse & Rouse, Cecilia Elena, 2011. "Constrained after college: Student loans and early-career occupational choices," Journal of Public Economics, Elsevier, vol. 95(1-2), pages 149-163, February.
    3. Gicheva, Dora, 2016. "Student loans or marriage? A look at the highly educated," Economics of Education Review, Elsevier, vol. 53(C), pages 207-216.
    4. Christopher Avery & Sarah Turner, 2012. "Student Loans: Do College Students Borrow Too Much--Or Not Enough?," Journal of Economic Perspectives, American Economic Association, vol. 26(1), pages 165-192, Winter.
    5. Emily Dai, 2013. "Student loan delinquencies surge," Inside the Vault, Federal Reserve Bank of St. Louis, issue Spring.
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    More about this item

    Keywords

    Student loan debt; Debt forgiveness; Debt cancellation; Amer- ican politics;
    All these keywords.

    JEL classification:

    • H8 - Public Economics - - Miscellaneous Issues
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents

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