| Abstract: |
Student loan forgiveness has been proposed as a means to alleviate soaring student loan burdens. Who benefits from loan forgiveness, and how does it affect borrowers? This paper uses administrative credit bureau data to study the distributional, consumption, borrowing, and employment effects of the largest event of student loan forgiveness in history. Beginning in March 2021, the United States federal government ordered $132 billion in student loans cancelled, or 7.8% of the total $1.7 trillion in outstanding student debt. We find that student loan forgiveness led to increases in mortgage, auto, and credit card debt. We find small or no effects on non-student loan delinquencies. Borrowers’ monthly earnings and employment fall.
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Biography:
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Constantine Yannelis is the Janeway Professor of Financial Economics, and joined the University of Cambridge Faculty of Economics in 2024. He is also a fellow at Pembroke College, the Deputy Director of the Janeway Institute, a J.M. Keynes Fellow, and a faculty research fellow at the National Bureau of Economic Research. Yannelis is an Associate Editor at the Review of Corporate Finance Studies and the Review of Financial Studies. His research focuses on household finance, corporate finance, human capital, private equity, small business and student loans. His recent research primarily explores repayment, information asymmetries and strategic behavior in the student loan market and consumer credit markets. Yannelis has won numerous academic awards including the 2021 AQR Young Researcher Award, recognizing talented new academics producing innovative and impactful research.
Yannelis’ academic research has been published in leading academic journals such as the Journal of Financial Economics, the Journal of Finance, the Review of Financial Studies and the American Economic Review and has been featured in The Wall Street Journal, Financial Times, The New York Times, The Washington Post, The Economist, Bloomberg, Forbes and other media outlets. His research is also referenced by policymakers, for example being cited in White House special reports, annual economic reports of the President, the 2022 State of the Union Address, regulatory rule-making, as well as Congressional and Senate testimonies.
Before joining Cambridge, Yannelis was an Assistant and Associate Professor at the University of Chicago Booth School of Business, and an Assistant Professor of Finance at New York University Stern School of Business. Prior to his time at Cambridge, he worked at the United States Department of the Treasury, the Congressional Budget Office, the Organization for Economic Cooperation and Development, the United Nations and the Federal Reserve Bank of Chicago as an Associate Economist.
Yannelis earned an MA in applied mathematics from Université de Paris I: Panthéon-Sorbonne and a BA in economics and history from the University of Illinois at Urbana-Champaign, where he won the Department of Economics Outstanding Young Alumni Award in 2023. He holds a PhD in economics from Stanford University.
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