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040 |aCaOODSP|beng|erda|cCaOODSP
0410 |aeng|beng|bfre
043 |an-us---
0861 |aFB3-5/2023-54E-PDF
1001 |aBoutros, Michael, |eauthor.
24510|aBorrow now, pay even later : |ba quantitative analysis of student debt payment plans / |cby Michael Boutros, Nuno Clara and Francisco Gomes.
264 1|a[Ottawa] : |bBank of Canada = Banque du Canada, |c2023.
264 4|c©2023
300 |a1 online resource (iii, 59 pages) : |bcolour illustrations.
336 |atext|btxt|2rdacontent
337 |acomputer|bc|2rdamedia
338 |aonline resource|bcr|2rdacarrier
4901 |aStaff working paper = Document de travail du personnel, |y1701-9397 ; |v2023-54
500 |aISSN assigned to different series.
500 |a"Last updated: October 27, 2023."
504 |aIncludes bibliographical references (pages 39-42).
5203 |a"In the United States, student debt currently represents the second largest component of consumer debt, just after mortgage loans. Repayment of those loans reduces disposable income early in the borrower's lifecycle, when marginal utility is particularly high, and limits their ability to build a buffer stock of wealth to insure against background risks. In this paper, we study alternative student debt contracts that offer a 10-year deferral period. Borrowers defer either principal payments only ("Principal Payment Deferral", PPD) or all payments ("Full Payment Deferral", FPD) with the missed interest payments added to the value of the debt outstanding. We first calibrate an equilibrium with the current contracts, and then solve for counterfactual equilibria with the PPD or FPD contracts. We find that both alternatives generate economically large welfare gains, which are robust to different assumptions about the behavior of the lenders and borrower preferences. We decompose the gains into the percentages resulting from loan repricing and from the deferral of debt repayments. We compare these alternative contracts with the changes to Income Driven Repayment Plans being proposed by the current U.S. administration and show that they dominate such proposals. Crucially, the PPD and FPD contracts deliver similar welfare gains to the debt relief program considered by the administration, with no impact on the government budget constraint"--Abstract, page ii.
546 |aIncludes abstracts in English and French.
650 0|aStudent loans|zUnited States|xEconometric models.
650 0|aConsumer credit|zUnited States|xEconometric models.
650 0|aDebt relief|zUnited States|xEconometric models.
650 6|aPrêts d'études|zÉtats-Unis|xModèles économétriques.
650 6|aCrédit à la consommation|zÉtats-Unis|xModèles économétriques.
650 6|aDettes|xAllègement|zÉtats-Unis|xModèles économétriques.
7102 |aBank of Canada, |eissuing body.
830#0|aStaff working paper (Bank of Canada)|v2023-54.|w(CaOODSP)9.806221
85640|qPDF|s566 KB|uhttps://publications.gc.ca/collections/collection_2023/banque-bank-canada/FB3-5-2023-54-eng.pdf