The distributional effects of student loan forgiveness

Sylvain Catherine and Constantine Yannelis

Journal of Financial Economics, 2023, vol. 147, issue 2, 297-316

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 the benefits of debt cancellation. Consequently, forgiveness would benefit the top decile as much as the bottom three deciles combined. Enrolling households who would benefit from income-driven repayment is less expensive and distributes more funds to lower-income households.

Keywords: Student debt; Inequality (search for similar items in EconPapers)
JEL-codes: D14 D31 H52 H81 I24 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (3)

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Related works:
Working Paper: The Distributional Effects of Student Loan Forgiveness (2020)
Working Paper: The Distributional Effects of Student Loan Forgiveness (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:147:y:2023:i:2:p:297-316

DOI: 10.1016/j.jfineco.2022.10.003

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