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Default and Repayment among Baccalaureate Degree Earners

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  • Lance Lochner

    ()
    (CIBC Center for Human Capital and Productivity and University of Western Ontario)

  • Alexander Monge-Naranjo

    (Federal Reserve Bank of St. Louis)

Abstract

More than low default rates, lenders are interested in the expected return on their loans. In this paper, we consider a number of other measures of repayment and nonpayment that are likely to be of direct interest to lenders. Using data from the Baccalaureate and Beyond Longitudinal Study, we document repayment and nonpayment outcomes 10 years after graduation for American students receiving BA/BS degrees in 1993. We estimate differences in these outcomes across individual/family background characteristics, college major, type of institution, the amount borrowed, and post-graduation income. A key contribution is our analysis of the following outcomes in addition to student loan default rates: the fraction of the original undergraduate loan amount repaid as of 2003, nonpayment rates (including deferment and forbearance as well as default), and the fraction of original undergraduate loan amounts on which borrowers defaulted or are currently not repaying.

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File URL: http://humcap.uchicago.edu/RePEc/hka/wpaper/Lochner_Monge-Naranjo_2014_default-repayment-baccalaureat.pdf
File Function: First version, 1/28/2014
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Bibliographic Info

Paper provided by Human Capital and Economic Opportunity Working Group in its series Working Papers with number 2014-003.

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Date of creation: Jan 2014
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Handle: RePEc:hka:wpaper:2014-003

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Keywords: student loans; default; forbearance and deferment; labor market outcomes; return to lenders;

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  1. Dynarski, Mark, 1994. "Who defaults on student loans? Findings from the National Postsecondary Student Aid Study," Economics of Education Review, Elsevier, vol. 13(1), pages 55-68, March.
  2. David J. Deming & Claudia Goldin & Lawrence F. Katz, 2012. "The For-Profit Postsecondary School Sector: Nimble Critters or Agile Predators?," Journal of Economic Perspectives, American Economic Association, vol. 26(1), pages 139-64, Winter.
  3. Schwartz, S. & Finnie, R., 2002. "Student loans in Canada: an analysis of borrowing and repayment," Economics of Education Review, Elsevier, vol. 21(5), pages 497-512, October.
  4. Barsky R. & Bound J. & Charles K.K. & Lupton J.P., 2002. "Accounting for the Black-White Wealth Gap: A Nonparametric Approach," Journal of the American Statistical Association, American Statistical Association, vol. 97, pages 663-673, September.
  5. repec:hka:wpaper:2013-20 is not listed on IDEAS
  6. Lance Lochner & Todd Stinebrickner & Utku Suleymanoglu, 2013. "The Importance of Financial Resources for Student Loan Repayment," NBER Working Papers 19716, National Bureau of Economic Research, Inc.
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