The student loan system is $1.5 trillion mess that has attracted a ton of attention from policymakers to presidential candidates, with Sen. Elizabeth Warren (D-MA) proposing to cancel large amounts of outstanding debt.
Researchers looked at debt relief data from the credit bureau as well as from a lawsuit filings from 2017 related to National Collegiate — which held 800,000 private student loans totaling over $12 billion or about 11% of all outstanding student debt at the time — and concluded that there are “benefits of intervening in the student loan market to reduce the consequences of debt overhang problems by forgiving student debts.”
The report asserted that four things happened to borrowers in default who experienced debt relief: They saw their overall indebtedness reduced by 26%, were 12% less likely to default on other accounts, gained increased mobility when it came to job opportunities, and were more likely to increase consumption overall.
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