ERIC Number: EJ1447665
Record Type: Journal
Publication Date: 2024
Pages: 18
Abstractor: As Provided
ISBN: N/A
ISSN: ISSN-1557-3060
EISSN: EISSN-1557-3079
Assessing the Relative Progressivity of the Biden Administration's Federal Student Loan Forgiveness Proposal
Jacob Goss; Daniel Mangrum; Joelle Scally
Education Finance and Policy, v19 n4 p716-733 2024
We quantify the total stock of balances eligible for the Biden administration's 2022 student loan forgiveness proposal and examine which groups would have benefited most. Up to $442 billion in loans were eligible. Those who would have benefited most were younger, had lower credit scores, and lived in lower- and middle-income neighborhoods. We also find that Black and Hispanic borrowers would have disproportionately benefited from the proposal. We then compare the distribution of beneficiaries for the proposed policy to several alternative hypothetical forgiveness proposals and three existing tax credits. The additional forgiveness for Pell Grant recipients increased the progressivity of the policy at a cost of $129 billion. Reducing the income eligibility criterion in half from the proposal would have reduced the cost by nearly $100 billion and made the policy more progressive. Compared with existing tax credits, the announced forgiveness policy is less progressive than the Earned Income Tax Credit but more progressive than the 2019 Child Tax Credit and higher education tax credits. We conclude with a discussion of how each policy lever affects the progressivity of loan cancellation to help inform future policy.
Descriptors: Loan Repayment, Student Loan Programs, Low Income, African Americans, Hispanic Americans, Federal Legislation, Federal Aid, Grants, Low Income Groups, Tax Credits, Credit (Finance)
MIT Press. 55 Hayward Street, Cambridge, MA 02142. Tel: 617-253-2889; Fax: 617-253-1709; e-mail: journals-rights@mit.edu; Web site: http://bibliotheek.ehb.be:2329/loi/edfp
Publication Type: Journal Articles; Reports - Research
Education Level: N/A
Audience: N/A
Language: English
Sponsor: N/A
Authoring Institution: N/A
Identifiers - Laws, Policies, & Programs: Pell Grant Program; Earned Income Tax Credit
Grant or Contract Numbers: N/A