By Liz Sablich. A new Brookings paper, released yesterday as part of the Brookings Papers on Economic Activity (BPEA) Fall 2015 Conference, is generating headlines for its new and significant contribution to the understanding of student debt issues in the United States.  In “A crisis in student loans? How changes in the characteristics of borrowers and in the institutions they attended contributed to rising loan defaults,” authors Adam Looney of the U.S. Treasury Department and Constantine Yannelis of Stanford University effectively overcome the data limitations that have long encumbered research and policymaking in this area. They do so by linking Department of Education data on student borrowing with earnings information derived from de-identified tax records. More...

Two major changes to student finance were proposed in the Budget. The replacement of maintenance grants by loans from 2016–17 will raise debt for the poorest students, but do little to improve government finances in the long run. The proposed freezing of the repayment threshold for loans, on the other hand, will – if implemented – significantly improve government finances because it will result in an increase in graduate repayments.
These are the main findings of a new briefing note published today by the Institute for Fiscal Studies (IFS), funded by the Economic and Social Research Council. More...