The Distributional Effects of Student Loan Forgiveness

Sylvain Catherine () and Constantine Yannelis
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Sylvain Catherine: University of Pennsylvania - Wharton School of Business

No 2020-169, Working Papers from Becker Friedman Institute for Research In Economics

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.

Pages: 35 pages
Date: 2020
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Citations: View citations in EconPapers (1)

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https://repec.bfi.uchicago.edu/RePEc/pdfs/BFI_WP_2020169.pdf (application/pdf)

Related works:
Journal Article: The distributional effects of student loan forgiveness (2023)
Working Paper: The Distributional Effects of Student Loan Forgiveness (2020)
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