Who Borrows for College—and Who Repays?

Andrew F. Haughwout, Donghoon Lee, Joelle Scally, and Wilbert van der Klaauw



Student loans are increasingly a focus of discourse among politicians, policymakers, and the news media, resulting in a range of new ideas to address the swelling aggregate debt. Evaluating student loan policy proposals requires understanding the challenges faced by student borrowers. In this post, we explore the substantial variation in the experiences of borrowers and consider the distributional effects of various policy options.

Just Released: Introducing the SCE Household Spending Survey

Gizem Kosar, Kyle Smith, and Wilbert van der Klaauw



Today we are releasing new data on individuals’ experiences and expectations regarding household spending. These data have been collected every four months since December 2014 as part of our Survey of Consumer Expectations (SCE). The goal of this blog post is to introduce the SCE Household Spending Survey and highlight some of its features.

Do Expansions in Health Insurance Affect Student Loan Outcomes?

Maya Bidanda, Rajashri Chakrabarti, Sean Hundtofte, and Maxim L. Pinkovskiy



The Patient Protection and Affordable Care Act (ACA) is arguably the biggest policy intervention in health insurance in the United States since the passage of Medicaid and Medicare in 1965. The Act was signed into law in March 2010, and by 2016 approximately 20 to 24 million additional Americans were covered with health insurance. Such an extension of insurance coverage could affect not only medical bills, but also educational, employment, and broader financial outcomes. In this post, we take an initial look at the relationship between the ACA and higher education financing choices and outcomes. We find evidence that expansions in healthcare coverage may influence both the prevalence of student loans and loan repayment behavior. Specifically, our results suggest that individuals covered by ACA-related expansions are taking out slightly more loans and taking a longer time to start repayment.

Diplomas to Doorsteps: Education, Student Debt, and Homeownership

Rajashri Chakrabarti, Nicole Gorton, and Wilbert van der Klaauw



Evidence overwhelmingly shows that the average earnings premium to having a college education is high and has risen over the past several decades, in part because of a decline in real average earnings for those without a college degree. In addition to high private returns, there are substantial social returns to having a well-educated citizenry and workforce. A new development that may have important longer-term implications for education investment and for the broader economy is a significant change in the financing of higher education. State funding has declined markedly over the past two decades, a trend that has coincided with a significant increase in college tuition. To cover the rising cost of college, students and families have increased their reliance on student loans, funding a greater share of an increasing overall college cost. While the federal student loan program has undoubtedly helped mitigate the impact of higher costs on college access and enrollment, more and more students now leave college with higher amounts of debt. Given these trends, it is critical to understand whether holding student debt has affected young Americans’ later life outcomes, such as homeownership.

At the N.Y. Fed: Press Briefing on Household Borrowing with Close-Up on Student Debt

Rajashri Chakrabarti, Andrew Haughwout, Donghoon Lee, Joelle Scally, and Wilbert van der Klaauw



An examination of recent developments in household borrowing was the focus of a press briefing held this morning at the New York Fed. President William Dudley offered opening remarks on the latest developments, then Bank economists briefed the press on their analysis of household indebtedness, placing a spotlight on student loans. Their research is based on the New York Fed Consumer Credit Panel—which is based on Equifax credit report data—as well as data from the National Student Clearinghouse. The presentation contained three components: (1) an analysis how aggregate household debt today differs from its 2008 peak, (2) new evidence on student debt growth, delinquency and repayment, and (3) an investigation of the relationship between homeownership, student debt, and educational attainment.

Who Falters at Student Loan Payback Time?

Rajashri Chakrabarti, Michael Lovenheim, and Kevin Morris

Editor’s note: The labels for “Elite private” and “Non-elite private, not-for-profit” institutions in the charts have been corrected; they were initially transposed. We regret the error. (September 12, 12:45 p.m.)



This is the final post in a four-part series examining the evolution of enrollment, student loans, graduation and default in the higher education market over the course of the past fifteen years. In the first post, we found a marked increase in enrollment of 35 percent between 2000 and 2015, led mostly by the for-profit sector—which increased enrollment by 177 percent. The second post showed that these new enrollees were quite different from the traditional enrollees. Yesterday’s post demonstrated an unprecedented increase in loan origination amounts during this period—nearly tripling between 2000 and 2015. This surge was driven most prominently by a massive increase in the number of borrowers in the public community college sector and the private for-profit college sector. Given the large increase in the borrower pool and loan originations, it is paramount to understand the consequences of these changes for the student loan default rate. This post aims to do just that. We focus on three-year cohort default rates reported by the United States Department of Education. The three-year cohort default rate is defined as the percentage of a school's borrowers who enter repayment during a particular federal fiscal year—running from October 1 to September 30—and default prior to the end of the second following fiscal year. Most federal loans enter default when payments are more than 270 days past due.

The Changing Role of Community-College and For-Profit-College Borrowers in the Student Loan Market

Rajashri Chakrabarti, Michael Lovenheim, and Kevin Morris

Editor’s note: The chart sources cited in this post have been corrected. (September 9, 12:55 p.m.)



In the first post in this series, we characterized the rapid transformation of the higher education market over the 2000-2015 period, a transformation that was led by explosive growth of the for-profit sector of higher education. In the second post, we found that most of this growth was driven by nontraditional students entering these institutions. Given this growth and the marked change in student composition, it is important to understand what impact these patterns might have on student loan originations, student loan volume, and the borrower pool in the various sectors of higher education. While a causal analysis is beyond the scope of this post, we instead examine descriptive patterns in these critical postsecondary outcomes. Was the growth in for-profit enrollment associated with a higher incidence of student loans? Were for-profit students, the main contributors of this growth, more or less likely to take student loans, and were they more or less likely to originate larger student loans? How about community-college borrowers, especially since community college enrollment increased noticeably over the period? This post focuses on these questions.

Trends in Debt Concentration in the United States By Income

Donghoon Lee, Matthew Mazewski, Joelle Scally, and Basit Zafar



Household debt in the United States expanded before the Great Recession, contracted afterward, and has been recovering since 2013. But how has the distribution of debt across different income groups evolved over time? Who has been driving the recovery of household debt over the past two years?  To date, there has been little work on how borrowing patterns for high- and low-income individuals have changed over time, although one notable exception is Amromin and McGranahan. Here, using the New York Fed Consumer Credit Panel (CCP), a quarterly panel data set based on Equifax credit reports, we shed further light on these questions.

Just Released: Press Briefing on Student Loan Borrowing and Repayment Trends, 2015

Andrew F. Haughwout, Donghoon Lee, Joelle Scally, and Wilbert van der Klaauw



This morning, Jamie McAndrews, the Director of Research at the Federal Reserve Bank of New York, spoke to the press about the economic recovery, and his speech was followed by a special briefing by New York Fed economists on student loans. Here, we provide a short summary of the student loan briefing.

Payback Time? Measuring Progress on Student Debt Repayment

Meta Brown, Andrew F. Haughwout, Donghoon Lee, Joelle Scally, and Wilbert van der Klaauw

Correction: We changed the adjective describing borrowers owing less than $5,000 from “high-balance” to “small-balance” in the first line of the seventh paragraph. We regret the error.

Third in a three-part series

Student debt continues to make headlines because of its high balances and high rates of delinquency and default—troubling issues that we discussed in our previous posts this week. A less prominent, but still important, issue is the pace at which former students are—or are not—paying off their debts. This issue is important to borrowers because the longer they take to repay their debts, the more interest they accrue, the longer they have to worry about making payments, and the longer they have to deal with the consequences of unpaid debts. It’s also important to the macroeconomy because longer repayment periods mean that a large number of young adults may have their spending and housing purchase decisions constrained by student debt (and widespread delinquency) for many years, even if they eventually qualify for some debt forgiveness. For these reasons, in this third and final post of our student loan series, we use our Consumer Credit Panel (based on Equifax data) to examine how fast (or slow) student borrowers are able to pay off their loans.