NBER

Ankit Kalda

Kelley School of Business
1309 E 10th St
Indiana University
Bloomington, IN 47405
Tel: (812) 855-1395

E-Mail: EmailAddress: hidden: you can email any NBER-related person as first underscore last at nber dot org
Institutional Affiliation: Indiana University

NBER Working Papers and Publications

May 2019Second Chance: Life without Student Debt
with Marco Di Maggio, Vincent Yao: w25810
We exploit an episode of plausibly-random debt discharge, due to the inability of National Collegiate to prove chain of title, to examine the effects of student debt relief on individual credit and labor market outcomes. We find that borrowers experiencing this debt relief shock reduce their indebtedness by 11%, and number of other delinquent accounts by 24%. After the discharge, we see increases in the borrowers' geographical mobility, probability of changing jobs, and ultimately their income, which increases by about $3000 over a three year period. Although we cannot quantify its costs, these findings speak to the benefits of loan forgiveness in reducing the consequences of debt overhang.

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