The Insurance Implications of Government Student Loan Repayment Schemes
AEA Papers and Proceedings
vol. 113,
May 2023
(pp. 535-40)
Abstract
We use new administrative data that link detailed information on Canadian student loan recipients with their repayment and income histories from the Canada Student Loans Program, income tax filings, and postsecondary schooling records to measure the extent to which student borrowers adjust loan repayments to insure against income variation. Loan payments are shown to increase in income, more so in early years and for individuals with higher initial debt. We estimate that on average an unexpected $1,000 change in annual income is associated with a $30 change in loan payment. Loan repayments are also used to absorb persistent income variation.Citation
Gervais, Martin, Qian Liu, and Lance Lochner. 2023. "The Insurance Implications of Government Student Loan Repayment Schemes." AEA Papers and Proceedings, 113: 535-40. DOI: 10.1257/pandp.20231082Additional Materials
JEL Classification
- G51 Household Finance: Household Saving, Borrowing, Debt, and Wealth
- H52 National Government Expenditures and Education
- I22 Educational Finance; Financial Aid
- I23 Higher Education; Research Institutions
- I28 Education: Government Policy