Student-Loan Payment Pause Led Borrowers to Take on More Debt

Student-Loan Payment Pause Led Borrowers to Take on More Debt

THE SIGNAL

In 2020 payments on student loans were paused, initially for 3 months but then extended via executive action until June 30, 2023. This was a big program, at the time there were approximately 45 million student loan borrowers, with an outstanding balance of over $1.7 trillion. The main results of the program were that borrowers used the pause to take on more debt. From a new paper by Dinerstein, Yannelis and Chen:
We evaluate the effects of the 2020 student debt moratorium that paused payments for student loan borrowers. Using administrative credit panel data, we show …

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