A study released by the National Bureau of Economic Research (NBER) found that borrowers who had their private loans discharged were more likely to change jobs and make about $3,000 more in income over a period of three years. In addition, the indebtedness of the borrowers is reduced by 26%, and the borrowers are 11% less likely to default on other loans. The borrowers also demonstrate increased likelihoods of moving across states, whereas they might not have had the ability to do so before being given debt relief.
The average amount of debt relief was $6,855, with the average borrower making about $2,376 per month.
The study used credit bureau information (entailing borrowers’ employment/income information, monthly payments, and loan information) and lawsuit filings to track borrowers who had received debt relief from the National Collegiate Student Loan Trust after it was unable to provide chain of title for thousands of loans on a nationwide scale.
The original report can be found and purchased/downloaded here.
Sources: NASFAA, Student Debt Relief Improves Job, Income, Credit Outcomes,