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David Carson Jinkins
''The Self-Perpetuating Student Loan Debt Crisis''
( 2020, Vol. 40 No.3 )
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%.
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
Manuscript Received : Oct 28 2019 Manuscript Accepted : Aug 31 2020

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