Friday, November 29, 2019

Racial Disparities in Student Loan Outcomes - Andrew F. Haughwout, Donghoon Lee, Joelle Scally, and Wilbert van der Klaauw, Liberty Street Economics

We wrote about the heterogeneity of student loan borrowing and outcomes in an October Liberty Street Economics post, Who Borrows for College–and Who Repays. The analysis showed that people from both lower- and higher-income zip codes are almost equally likely to take out student loans and have surprisingly similar outstanding balances. The difference, however, is in their repayment success; although high delinquency rates are common among student loan borrowers, delinquencies are markedly higher in the bottom half of the income distribution—where we showed that there are heterogeneous outcomes for borrowers of different income backgrounds. Borrowers living in higher-income zip codes are more likely to be successful paying their student loans and are less likely to have defaulted.