Calls for student loan debt relief have intensified since the November 2020 presidential election, with many advocating for complete debt forgiveness and others calling for a set amount of relief. In a recent BFI Working Paper, Constantine Yannelis of Chicago Booth and Sylvain Catherine of the University of Pennsylvania find that full or partial loan forgiveness is regressive, helping middle and high-earners the most, and that income-driven repayment (IDR) is the least expensive and most progressive policy option, more heavily benefiting low earners and minorities.
There are many competing proposals in the current environment. The following interactive allows you to compare 12 policy options, and their distributional impacts by income and race. The graphs report how much the average person will save over the next 25 years as a function of their decile of earnings and ethnicity, in present value terms. Individuals without student debt are included. Households are distributed into deciles of per-adult earnings, adjusted for age.
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Student Debt Relief Policy Options
