American Economic Review: Insights
ISSN 2640-205X (Print) | ISSN 2640-2068 (Online)
Debt Moratoria: Evidence from Student Loan Forbearance
American Economic Review: Insights
vol. 6,
no. 2, June 2024
(pp. 196–213)
Abstract
We evaluate the effects of the 2020 student debt moratorium. Using administrative credit panel data, we compare borrowers whose loans were frozen to borrowers whose loans were not frozen based on whether the government owned the loans. We estimate that borrowers used the new liquidity to increase borrowing on mortgages, auto loans, and credit cards rather than avoid delinquencies. The effects are concentrated among borrowers without delinquencies, who saw no change in credit scores. The results highlight an important complementarity between liquidity and credit, as liquidity increases the demand for credit even as the supply of credit is fixed.Citation
Dinerstein, Michael, Constantine Yannelis, and Ching-Tse Chen. 2024. "Debt Moratoria: Evidence from Student Loan Forbearance." American Economic Review: Insights, 6 (2): 196–213. DOI: 10.1257/aeri.20230032Additional Materials
JEL Classification
- E32 Business Fluctuations; Cycles
- G21 Banks; Depository Institutions; Micro Finance Institutions; Mortgages
- G51 Household Finance: Household Saving, Borrowing, Debt, and Wealth
- H81 Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts
- I22 Educational Finance; Financial Aid
- I23 Higher Education; Research Institutions