"The key problem is in default and repayment problems," said Dynarski. "In terms of a macro-level, is this a big drag on the economy? I don't think so. In terms of a micro-level, are there people who's lives are ruined by fairly small amounts of debt? Yes, because if you go into default on your loans, your credit is ruined and the cost of getting a credit card goes up, the cost of getting a car goes up...for an individual person's life and their ability to participate in the economy, and live comfortably, it can make a huge difference... stopping defaults could have a stimulating effect."
“There’s just layers and layers of dysfunction here,” Dynarski said. “If you were hoping for a very simple economic story, it’s not.”