ASP.net MVC JS file running fine after publishing but fail to load (500 internal server error) in debug on local IIS

In my project, I've a JS file that I've included in the index file at the top of the page. The file contains collection of common jquery functions for events, e.g.:

$('#student').click(function () {
     var url = "../Layout/EditStudent?StdID=" + $(this).attr('data-sid') + '&crsID=' + $(this).attr('data-crsID');
     console.info(url);         
     window.location.href = url;
 });

When I publish the application to IIS, the application along with the buttons works fine. However, when I debug the application in Visual Studio (which to my understanding spawns a local IIS/ IIS-Express instance), buttons don't work and in browser's console window, I can see the error:

500 Internal Server Error. 

After checking the server logs, I can see the following warning:

ModuleName      IIS Web Core
Notification    AUTHENTICATE_REQUEST
HttpStatus      500
HttpReason      Internal Server Error
HttpSubStatus   0
ErrorCode       Either a required impersonation level was not provided, or the provided impersonation level is invalid. (0x80070542)

What am I doing wrong?