The case for delaying student loan repayment schedules
Student loans are vital for widening access to higher education, but they can also create heavy financial pressure after graduation.
In this video, Francisco Gomes, Professor of Finance at London Business School, explains research showing how student debt contracts could be redesigned to improve borrowers’ long-term welfare. His study suggests delaying repayments for 10 years after graduation—when individuals are in stronger financial positions—would significantly reduce delinquency rates and improve lifetime well-being.
Using empirically calibrated simulations, Francisco and his co-authors find that this approach delivers benefits equivalent to those of large-scale debt relief proposals, but without any fiscal cost to governments or taxpayers.
Student loans are vital for widening access to higher education, but they can also create heavy financial pressure after graduation.
In this video, Francisco Gomes, Professor of Finance at London Business School, explains research showing how student debt contracts could be redesigned to improve borrowers’ long-term welfare. His study suggests delaying repayments for 10 years after graduation—when individuals are in stronger financial positions—would significantly reduce delinquency rates and improve lifetime well-being.
Using empirically calibrated simulations, Francisco and his co-authors find that this approach delivers benefits equivalent to those of large-scale debt relief proposals, but without any fiscal cost to governments or taxpayers.