The Labor Market Consequences of Student Loan Forbearance

33 Pages Posted: 16 Apr 2024

See all articles by Naser Hamdi

Naser Hamdi

Equifax, Inc.

Ankit Kalda

Indiana University - Kelley School of Business - Department of Finance

David Sovich

University of Kentucky

Date Written: April 7, 2024

Abstract

We examine how the pandemic-era federal student loan forbearance program affected individual-level labor market outcomes. Using a unique dataset of unemployment insurance claims, credit histories, and payroll records, we find that moral hazard was not a material side effect of student loan forbearance. For laid-off student loan borrowers, we find a positive but insignificant impact of forbearance on average job-search durations and no effects on reservation wages. We also find no significant effects of forbearance on the future earnings or hours worked of employed borrowers. The labor market effects of forbearance are muted across both constrained and unconstrained borrowers.

Keywords: Student loans, forbearance, student loan forbearance, labor income, moral hazard

JEL Classification: G50, D10, D14, R20

Suggested Citation

Hamdi, Naser and Kalda, Ankit and Sovich, David, The Labor Market Consequences of Student Loan Forbearance (April 7, 2024). Available at SSRN: https://ssrn.com/abstract=4787183 or http://dx.doi.org/10.2139/ssrn.4787183

Naser Hamdi

Equifax, Inc. ( email )

Atlanta, GA
United States

Ankit Kalda (Contact Author)

Indiana University - Kelley School of Business - Department of Finance ( email )

1309 E. 10th St.
Bloomington, IN 47405
United States

David Sovich

University of Kentucky ( email )

Lexington, KY 40506
United States

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