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Second Chance
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Second Chance

Life without Student Debt

Marco Di Maggio, Ankit Kalda and Vincent W. Yao
SSRN, 2019
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Editorial Rating

8

Qualities

  • Controversial
  • Analytical
  • Hot Topic

Recommendation

Student loan debt in the United States is quickly becoming a crisis. But suppose this debt was forgiven, as some politicians have proposed? Forgetting about the cost of such a policy for a moment, how would forgiveness affect a borrower’s other consumer debt and income growth prospects? In this scholarly paper, economists Marco Di Maggio, Ankit Kalda and Vincent Yao find out what happens to people’s financial situations when they no longer face student debt. The results may surprise you, adding fuel to the arguments about this timely topic.

Take-Aways

  • At $1.5 trillion as of the first quarter of 2018, student loan debt in the United States has become a major cause for concern.
  • Because of a discharge of thousands of loans due to ownership issues, researchers could study the effects of student loan debt relief on borrowers.
  • With their debt forgiven, these individuals reduced their other liabilities by an average of $4,000.

About the Authors

Marco Di Maggio is an assistant professor at Harvard Business School. Ankit Kalda is an assistant professor at Indiana University. Vincent W. Yao is an associate professor at Georgia State University.

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