The Distributional Effects of Student Loan Forgiveness

Sylvain Catherine and Constantine Yannelis

No 28175, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: D14 G18 G5 G51 H52 H81 J18 J24 (search for similar items in EconPapers)
Date: 2020-12
New Economics Papers: this item is included in nep-lma
Note: AP CF ED LS PE POL
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Published as Sylvain Catherine & Constantine Yannelis, 2023. "The distributional effects of student loan forgiveness," Journal of Financial Economics, vol 147(2), pages 297-316.

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