Working Paper: NBER ID: w28175
Authors: Sylvain Catherine; Constantine Yannelis
Abstract: We study the distributional consequences of student debt forgiveness in present value terms, accounting for differences in repayment behavior across the earnings distribution. Full or partial forgiveness is regressive because high earners took larger loans, but also because, for low earners, balances greatly overstate present values. Consequently, forgiveness would benefit the top decile as much as the bottom three deciles combined. Blacks and Hispanics would also benefit substantially less than balances suggest. Enrolling households who would benefit from income-driven repayment is the least expensive and most progressive policy we consider.
Keywords: No keywords provided
JEL Codes: D14; G18; G5; G51; H52; H81; J18; J24
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| loan forgiveness policies (universal) (H81) | benefits for high-income borrowers (G51) |
| loan forgiveness policies (universal) (H81) | benefits for low-income borrowers (G51) |
| high-income individuals (D31) | loan forgiveness (universal) (H81) |
| low-income families (I32) | loan balances (G51) |
| IDR plans (F33) | equitable outcomes (D63) |
| income levels (J31) | benefits of forgiveness policies (G28) |
| loan forgiveness policies (IDR) (F34) | benefits for low-income borrowers (G51) |