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- Title
Who Mismanages Student Loans, and Why?
- Authors
Cornaggia, Kimberly; Xia, Han
- Abstract
Many financially distressed students who qualify for federal assistance plans with interest moratorium and principal forgiveness instead accrue interest over long periods of nonpayment. This loan mismanagement is associated with higher delinquency. Mismanagement varies significantly across student gender and race: it is more prominent among male and non-white students. Mismanagement also varies across loan servicers, depending on proxies for student-adverse servicer policies. We consider explanations based on student selection and servicer treatment for loan mismanagement. Student financial literacy plays an important role but variation in treatment on the part of loan servicers appears more important. Authors have furnished an Internet Appendix , which is available on the Oxford University Press Web site next to the link to the final published paper online
- Subjects
STUDENT loans; LOAN servicing; LOAN costs; CREDIT management; PERSONAL finance; NONPERFORMING loans; INTEREST costs
- Publication
Review of Financial Studies, 2024, Vol 37, Issue 1, p161
- ISSN
0893-9454
- Publication type
Article
- DOI
10.1093/rfs/hhad058