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The great recession, college enrollment, and the dynamics of student debt

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  • Grosz, Michel
  • Monarrez, Tomás

Abstract

We examine the Great Recession’s long-term impact on federal student loan borrowing and repayment, using detailed federal administrative records and leveraging comparisons across labor markets with varying unemployment severity. A one percentage point increase in recession unemployment caused 7% higher outstanding debt and 6% more defaults. By 2019, the recession accounted for 19%–32% of undergraduate debt increases and 10%–25% of default increases across institutional sectors. Borrowers enrolled at the onset of the recession experienced the largest effects on debt accumulation and repayment distress. For this group, recession-induced borrowing is linked with sustained declines in program completion, suggesting reduced financial welfare.

Suggested Citation

  • Grosz, Michel & Monarrez, Tomás, 2026. "The great recession, college enrollment, and the dynamics of student debt," Economics of Education Review, Elsevier, vol. 112(C).
    • Handle: RePEc:eee:ecoedu:v:112:y:2026:i:c:s0272775726000385
    DOI: 10.1016/j.econedurev.2026.102796
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    Keywords

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    JEL classification:

    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • H81 - Public Economics - - Miscellaneous Issues - - - Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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