Student Loans and Borrower Outcomes

Abstract

This review surveys the literature on student lending, emphasizing empirical studies of default, credit outcomes, and earnings. Student loans exist to alleviate credit constraints and, in theory, may have different effects on outcomes through multiple channels. There is significant heterogeneity in outcomes across types of borrowers, with many adverse outcomes driven by a subset of primarily for-profit institutions. We conclude by exploring policy options such as student loan forgiveness, income-driven repayment, income-share agreements, and penalizing schools for adverse borrower outcomes. These policies lead to possible equity and efficiency trade-offs.