In the paper, titled \”The Distributional Results of Student Loan Forgiveness,\” economists Sylvain Catherine and Constantine Yannelis conclude that universal student loan \”forgiveness would benefit the top decile as much as the bottom three deciles combined.\”
Not all student-loan-forgiveness schemes might have exactly the same effects, they note:
There exist several ways in which debt can be discharged, significant distributional implications. For instance, forgiveness can be universal, capped or geared to specific borrowers. These debt cancellation policies can benefit different socioeconomic and ethnic groups. This paper explores their distributional impacts. We find that the advantages of universal debt forgiveness policies largely accrue to high-income borrowers, while forgiveness through expanding income-contingent loan plans instead favors middle-income borrowers.
Income-contingent payment plans and loan forgiveness schemes already exist in the U.S. Increasing enrollment such plans \”or increasing these plans' generosity is yet another option for targeted debt forgiveness,\” and something that will actually benefit middle-income debtors a lot more than their wealth counterparts, the authors suggest.
But full or partial loan forgiveness no matter income and loan size would be \”highly regressive, with the vast majority of benefits accruing to high-income individuals,\” they conclude.
Reason's Mike Riggs offers some better suggestions for student loan reform here.
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