The Long-Run Impact of the Great Recession on Student Debt

138 Pages Posted: 24 Sep 2021

See all articles by Sergio Pinto

Sergio Pinto

University of Maryland; Instituto Universitário de Lisboa (ISCTE-IUL), DINÂMIA'CET

Marshall Steinbaum

University of Utah Department of Economics

Date Written: September 7, 2021

Abstract

This paper investigates the effect of local labor market shocks during the Great Recession
on subsequent student debt-related outcomes for a panel of 1 million student loan borrowers between the ages 17 and 34 in 2009, following that cohort for the subsequent 10 years.
We find that the Great Recession significantly increased student indebtedness, delinquency
and default on student debt, and other forms of non-repayment of student loans. The Great
Recession’s effect on student indebtedness amplifies throughout the length of the panel,
through 2019. A one-percentage-point-larger increase in the local unemployment rate be-
tween 2007 and 2009 corresponds to a $812.20-larger change in outstanding student debt in
2019, relative to a 2009 baseline loan balance. We interpret these findings as evidence that
student indebtedness and associated non-repayment is an effect of prolonged labor market
slackness and credentialization.

Suggested Citation

Pinto, Sergio and Steinbaum, Marshall, The Long-Run Impact of the Great Recession on Student Debt (September 7, 2021). Available at SSRN: https://ssrn.com/abstract=3928927 or http://dx.doi.org/10.2139/ssrn.3928927

Sergio Pinto

University of Maryland ( email )

College Park
College Park, MD 20742
United States

Instituto Universitário de Lisboa (ISCTE-IUL), DINÂMIA'CET ( email )

Portugal

Marshall Steinbaum (Contact Author)

University of Utah Department of Economics ( email )

1645 Central Campus Dr.
Salt Lake City, UT 84112
United States

HOME PAGE: http://https://faculty.utah.edu/u6024209-Marshall_Steinbaum/hm/index.hml

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