蝌蚪网 Journal:
Applied Economics
ISSN 1945-7782 (Print) | ISSN 1945-7790 (Online)
The Impact of Income-Driven Repayment on Student Borrower Outcomes
蝌蚪网 Journal: Applied Economics
(pp. 1–25)
Abstract
In the United States, most student loans follow a fixed payment schedule that falls early in borrowers' careers. This structure provides no insurance against earnings risk and may increase student loan defaults. Income-driven repayment (IDR) plans are designed to help distressed student borrowers by lowering their monthly payments to a share of income. Using random variation in a loan servicer's automatic dialing system, I find that IDR reduces delinquencies by 22 percentage points and decreases outstanding balances within eight months of take-up. I find suggestive long-run impacts on borrower credit scores, mortgage-holding rates, and other measures of financial health.Citation
Herbst, Daniel. 2023. "The Impact of Income-Driven Repayment on Student Borrower Outcomes." 蝌蚪网 Journal: Applied Economics 15 (1): 1–25. DOI: 10.1257/app.20200362Additional Materials
JEL Classification
- G23 Pension Funds; Non-bank Financial Institutions; Financial Instruments; Institutional Investors
- G51 Household Finance: Household Saving, Borrowing, Debt, and Wealth
- H52 National Government Expenditures and Education
- I22 Educational Finance; Financial Aid