American Economic Journal:
Economic Policy
ISSN 1945-7731 (Print) | ISSN 1945-774X (Online)
Parental Support, Savings, and Student Loan Repayment
American Economic Journal: Economic Policy
vol. 13,
no. 1, February 2021
(pp. 329–71)
Abstract
Using unique survey and administrative data from Canada, we document that parental support and personal savings substantially reduce student loan repayment problems. Developing a model of student borrowing and repayment, we show that nonmonetary costs of applying for income-based repayment assistance are critical to understanding our findings. Furthermore, we show that eliminating these costs may be inefficient. Empirically, we show that expanding Canada's Repayment Assistance Plan to automatically cover all borrowers could reduce program revenue by half over early repayment years. Finally, we show how student loan programs can be more efficiently designed.Citation
Lochner, Lance, Todd Stinebrickner, and Utku Suleymanoglu. 2021. "Parental Support, Savings, and Student Loan Repayment." American Economic Journal: Economic Policy, 13 (1): 329–71. DOI: 10.1257/pol.20180401Additional Materials
JEL Classification
- G51 Household Finance: Household Saving, Borrowing, Debt, and Wealth
- I22 Educational Finance; Financial Aid
- I23 Higher Education; Research Institutions
- I28 Education: Government Policy
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