Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/279171 
Year of Publication: 
2023
Series/Report no.: 
CESifo Working Paper No. 10422
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
We evaluate the effects of the 2020 student debt moratorium that paused payments for student loan borrowers. Using administrative credit panel data, we show that the payment pause led to a sharp drop in student loan payments and delinquencies for borrowers subject to the debt moratorium, as well as an increase in credit scores. We find a large stimulus effect, as borrowers substitute increased private debt for paused public debt. Comparing borrowers whose loans were frozen with borrowers whose loans were not frozen due to differences in whether the government owned the loans, we show that borrowers used the new liquidity to increase borrowing on credit cards, mortgages, and auto loans rather than avoid delinquencies. The effects are concentrated among borrowers without prior delinquencies, who saw no change in credit scores, and we see little effects following student loan forgiveness announcements. The results highlight an important complementarity between liquidity and credit, as liquidity increases the demand for credit even as the supply of credit is fixed.
Subjects: 
debt moratoria
student loans
JEL: 
G51
I22
Document Type: 
Working Paper
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