The Distributional Effects of Student Loan Forgiveness: An Update on SAVE and the COVID-19 Moratorium
Sylvain Catherine,
Mark Pérez Clanton and
Constantine Yannelis
National Tax Journal, 2024, vol. 77, issue 3, 655 - 680
Abstract:
Student loan forgiveness policies in the United States have undergone significant evolution and debate since 2020, with varying degrees of targeting and regressive implications. This paper offers an update on student loan forgiveness developments since 2020, evaluating recent proposals through the framework Catherine and Yannelis present in their work on the distributional effects of student loan forgiveness. We study the economic dynamics of student loan forgiveness in 2024, tracking proposed and implemented forgiveness measures and their distributional impacts. We find that new proposals expanding income-driven repayment are more progressive than a universal loan forgiveness plan, but we caution against the potential for increased moral hazard at the school level.
Date: 2024
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