Urban Institute on why student debt forgiveness plans are regressive

[highplainsdem]

Last edited Mon Feb 3, 2020, 01:29 AM - Edit history (1)

https://www.urban.org/urban-wire/which-households-hold-most-student-debt

Households in the lowest income quartile (with household incomes of $27,000 or less) hold only 12 percent of outstanding education debt. In other words, education debt is disproportionately concentrated among the well off.

These analyses, consistent with other findings, suggest that debt forgiveness plans would be regressive—providing the largest monetary benefits to those with the highest incomes.

-snip-

As you might expect, those who earn more owe more. The average household in the lowest income quartile with education debt owes $26,000. The average household in the top 10 percent of the income distribution with education debt owes $46,700.

People in the lowest income quartile tend to have little or no college education. Those in the top income quartile are most likely to have at least a bachelor’s degree. They paid for more education than those who are now less well off. The education many of them borrowed to pay for is also what helped them rise toward the top of the income distribution. In fact, 48 percent of outstanding student debt is owed by households with graduate degrees.

-snip-

The concentration of education debt among the relatively affluent means that some policies designed to reduce the burden of education debt are actually regressive. Focusing on lowering the interest rates on all outstanding student debt or on forgiving large amounts of that debt would bestow significant benefits on relatively well-off people.

As I've said elsewhere, we can help the people who really need the help without helping those who don't need the help.

And we can do that for a hell of a lot less than the $640 billion price tag of Warren's plan, let alone the $1.6 trillion price tage of Sanders' plan.

[mopinko]

1. just return them to bankruptcy protection. problem solved.

they never should have been exempted in the 1st place, since they are guaranteed anyway.

this is a clear loser issue, imho. free stuff does not fly in america. and esp free stuff that lets you go on to get rich.

[squirecam]

2. Right

The higher loans should result in a higher wage.

Unless you sought to pay $70,000 for a non-economic degree. But if that’s what happened, it’s no justification for the taxpayers to subsidize you.

[handmade34]

3. K&R n/t

[rickyhall]

4. I owe about $20k interest accumulated since 1982 on $7500 in original loans.

I only got refunds if they're very small for the last 37 years.