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| David Carson Jinkins |
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| ''The Self-Perpetuating Student Loan Debt Crisis'' |
| ( 2020, Vol. 40 No.3 ) |
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| Student loan debt has grown quickly over the last decade to become
the largest category of non-housing debt among American households.
Several prominent politicians have advocated cancelling all student loan debt. In this paper I argue that the possibility of debt cancellation has made borrowers hesitant to pay back their debt, further exacerbating the crisis and leading to more political support for debt cancellation. In a simple calibration targeting the growth of student loan debt from 2003-2018, I find that the probability of student loan debt cancellation is 28.5%. |
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| Keywords: Student loan debt, Debt forgiveness, Debt cancellation, Amer-
ican politics |
JEL: H8 - Public Economics: Miscellaneous Issues: General
H3 - Fiscal Policies and Behavior of Economic Agents: General |
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| Manuscript Received : Oct 28 2019 | | Manuscript Accepted : Aug 31 2020 |
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