Forecasting and Simulating U.S. Student Loan Repayment Outcomes : a State-Level Analysis of Macroeconomic Sensitivity
Zereh Zadeh, Sara (2025)
2025
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Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-2025082024031
https://urn.fi/URN:NBN:fi:amk-2025082024031
Tiivistelmä
In recent years, student debt in the United States has become a critical financial and social issue, with over $1.7 trillion in outstanding loans and millions of students struggling to repay. Even with the availability of various federal repayment plans, many borrowers face decades-long financial hardship, especially during periods of economic instability.
This thesis was written to analyze how U.S. federal loan repayment plans respond to economic events, with a focus on inflation and interest rate changes. Using Ordinary Least Squares (OLS) regression, ARIMA prediction, and Monte Carlo simulation, this research evaluates eight repayment plans and models delinquency risks across all U.S. states.
The data reveal that income-driven plans are more sensitive to inflation and interest rate fluctuations, whereas fixed plans exhibit greater stability. States with low median income and limited need-based aid face higher delinquency risk.
The study emphasizes the need for more adaptive repayment policies that respond to economic shocks and are more supportive of borrowers with higher risk profiles. This thesis yields data-driven recommendations for improving loan repayment outcomes and reducing default rates in uncertain economic environments.
This thesis was written to analyze how U.S. federal loan repayment plans respond to economic events, with a focus on inflation and interest rate changes. Using Ordinary Least Squares (OLS) regression, ARIMA prediction, and Monte Carlo simulation, this research evaluates eight repayment plans and models delinquency risks across all U.S. states.
The data reveal that income-driven plans are more sensitive to inflation and interest rate fluctuations, whereas fixed plans exhibit greater stability. States with low median income and limited need-based aid face higher delinquency risk.
The study emphasizes the need for more adaptive repayment policies that respond to economic shocks and are more supportive of borrowers with higher risk profiles. This thesis yields data-driven recommendations for improving loan repayment outcomes and reducing default rates in uncertain economic environments.