of being approved for a future loan (58%) as well as the probability of loan approval for the average borrower (62%). In terms of our model, expectations of improved credit access after debt relief are consistent with expecting debt relief to improve future ability to repay, which may improve credit access. It is also consistent with beliefs that lenders are shielded from the costs of debt relief. This is plausible in the context of our survey, where lenders were indeed compensated for their losses in past debt relief programs.

Both with respect to loan repayment and access to credit, we find that respondents’ beliefs about themselves are quite similar to their beliefs about others. Overall, the responses are in line with the belief that debt relief strengthens household balance sheets without causing significant costs to lenders or widespread moral hazard that could offset positive effects on credit supply.

How do expectations differ when borrowers are asked about debt forbearance versus debt forgiveness? In Figure 7, we report estimates of the difference in expectations between respondents of the debt forbearance and debt forgiveness surveys. When asked about forbearance, respondents are no more likely to expect that their repayment will suffer than respondents asked about forgiveness. However, they believe that they will be more likely to apply and be approved for future loans if they receive forbearance, rather than debt forgiveness. One possible explanation is that borrowers anticipate experiencing less stigma from forbearance than a debt writedown because it gives the borrower a chance to prove their creditworthiness. Another possibility is that respondents assume temporary forbearance to be less costly to the creditor than a permanent writedown. Respondents who are asked about forbearance are also more likely to expect future debt relief, compared to borrowers asked about debt forgiveness. This could reflect the belief that forbearance programs are politically less costly than debt forgiveness, or that governments are more willing to impose costs on banks than on the taxpayer.

**Figure 7:** Expectations: Debt Forbearance versus Debt Forgiveness

<!-- Start of picture text --> Beliefs about self Beliefs about average borrower<br>1[More likely to repay] 1[More likely to repay]<br>1[More likely to apply] 1[More likely to apply]<br>1[Loan approval more likely] 1[Loan approval more likely]<br>1[Future relief more likely] 1[Future relief more likely]<br>−0.50 −0.25 0.00 0.25 0.50 −0.50 −0.25 0.00 0.25 0.50<br>Coefficient estimate Coefficient estimate<br>Without controls With controls Without controls With controls<br><!-- End of picture text --> _Note:_ The figure estimates the difference in responses between survey participants asked about debt forbearance and debt forgiveness. Coefficient estimates and 90% confidence intervals are obtained from regressions of each response on an indicator equal to 1 if a respondent was asked about forbearance and zero otherwise. Controls include age, type of loan, log income, log loan amount outstanding, and number of loans outstanding.

Taken together, the results show that borrowers indeed perceive debt forbearance and forgiveness 24