Friedman Forum – The Value of Student Debt Relief and the Role of Administrative Barriers

Boxed lunches will be provided.

The Friedman Forum series offers students an opportunity for informal discussions with prominent economists.

On November 9, 2022, as part of the Friedman Forum speaker series, Harris Policy’s Damon Jones presented new research, “The Value of Student Debt Relief and the Role of Administrative Barriers.”

Abstract: There is currently more than $1.7 trillion in student loans held by households in the U.S., leading many to advocate for federal student loan forgiveness, raising concerns regarding racial equity and debt accumulation, and sparking debates regarding the progressivity of such policies. Recently, the Biden Administration announced a loan forgiveness program, canceling between $10,000 and $20,000 per borrower, subject to income restrictions, and additional adjustments to repayment rules. There already exist targeted forms of debt forgiveness. For example, the Federal Teacher Loan Forgiveness (TLF) program, which offsets between $5,000 and $17,500 in student debt for teachers working in high-need districts for at least 5 consecutive years. However, as of 2018, only 66 percent percent of teachers who had graduated with a BA in 2008 were aware of the federal loan assistance program, and fewer than 20 percent had participated. The set of facts that emerge in this setting raises a number of questions. Does debt forgiveness affect major decisions made by borrowers, both in general and relative to equivalent monetary incentives? Is student debt relief in the form of the TLF program an effective recruitment and retention tool? And if so, then why do seemingly eligible teachers forgo the benefit? Is it a matter of awareness, or are there other barriers?