University of Western Ontario
London, Ontario N6A5C2
NBER Working Papers and Publications
|December 2013||The Importance of Financial Resources for Student Loan Repayment|
with Lance Lochner, Todd Stinebrickner: w19716
Government student loan programs must balance the need to enforce repayment among borrowers who can afford to make their payments with some form of forgiveness or repayment assistance for those who cannot. Using unique survey and administrative data from the Canada Student Loan Program, we show that nearly all recent borrowers with annual incomes above $40,000 make their standard loan payments while repayment problems are common among borrowers earning less than $20,000. Still, over half of all low-income borrowers manage to make timely payments. We demonstrate that other financial resources in the form of savings and family support are key to understanding this - repayment problems are rare among low-earners with access to savings and family support. This has important policy implicat...