Blanket student loan forgiveness is redistributing wealth upward [View all]

[iemanja]

Claiming forgiving ALL student loan is far is a false claim. It in effect demands that middle income Americans pay for the education of those more privileged than themselves. Most student loan is owed by the upper 40% of incomes, with a substantial share concentrated among the top 20%.

A forgiveness program of $10-15K would cover the majority of people with Bachelors degrees. Forgiving loans above that amount targets those with graduate degrees and higher incomes.

What people are arguing for is the redistribution of wealth upward from middle incomes to those with substantially higher incomes. That is not fair or just. It is the opposite.

Here is some information supporting my position.

Recently released data from the Federal Reserve’s Survey of Consumer Finances confirm that upper-income households account for a disproportionate share of student loan debt—and an even larger share of monthly out-of-pocket student debt payments.

The highest-income 40 percent of households (those with incomes above $74,000) owe almost 60 percent of the outstanding education debt and make almost three-quarters of the payments. The lowest-income 40 percent of households hold just under 20 percent of the outstanding debt and make only 10 percent of the payments. It should be no surprise that higher-income households owe more student debt than others. Students from higher-income households are more likely to go to college in the first place. And workers with a college or graduate degree earn substantially more in the labor market than those who never went to college.

What may be more surprising, however, is the difference in payment burdens. A growing share of borrowers participate in income-driven repayment (IDR) plans, which do not require any payments from those whose incomes are too low and limit payments to an affordable share of income for others. And some borrowers are in forbearance or deferment because of financial hardships. As a result, out-of-pocket loan payments are concentrated among high-income households; few low-income households enrolled in IDR are required to make payments . . .

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https://www.brookings.edu/blog/up-front/2020/10/09/who-owes-the-most-in-student-loans-new-data-from-the-fed/

Here’s the breakdown by degree:

No college degree: 8%
Associate’s Degree: 7%
Bachelor’s Degree: 29%
Master’s Degree: 36%
Professional/Doctoral: 20%



https://www.savingforcollege.com/article/who-owes-the-most-student-loan-debt