Business School Profs Say Student Loan Forgiveness Disproportionately Benefits the Wealthy
“highly regressive policy”
This has been said by many people who are smart enough to see it, but Democrats continue to insist this is about helping disadvantaged students.
Campus Reform reports:
Top business school profs say student loan forgiveness, is a ‘highly regressive policy’
A working paper from professors at two of the nation’s top business schools is adding to the data calling student loan forgiveness policies into question.
University of Pennsylvania Wharton School Professor Sylvain Catherine and University of Chicago Booth School Professor Constantine Yannelis found student loan forgiveness, a policy supported by former Vice President Joe Biden, to be a “highly regressive policy,” disproportionately benefiting wealthier Americans.
Catherine took to social media to summarize the study’s core findings.
Notably, the average person in the bottom decile of income earners would receive $3,000 of balance forgiveness in present value terms, while someone in the top three deciles would receive roughly $8,000,
?New working paper? with Constantine Yannelis
We study “The Distributional Effects of Student Loan Forgiveness”. We find forgiveness to be a highly regressive policy. Full cancellation would distribute $192 bn to the top 20% of earners, and only $29 bn to the bottom 20%. 1/15 pic.twitter.com/R8HRxP9E3T— Sylvain Catherine (@sc_cath) November 30, 2020
Our main graph shows that the average person in the bottom 10% would receive $3000 in balance forgiveness, which is only worth $1,100 in present value terms (in actual savings). Someone in the top three deciles would receive roughly $8,000 in present value terms. 2/15 pic.twitter.com/lw7vsrYaWR
— Sylvain Catherine (@sc_cath) November 30, 2020
Overall, the bottom 10% receives less than 10% of the benefits of all the policies we consider. Outstanding student debt is inversely correlated with economic hardship, so it is difficult to design a forgiveness policy that does not accentuate inequality. 14/15
— Sylvain Catherine (@sc_cath) November 30, 2020
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Comments
I received an email yesterday asking me if I would like my student loans taken out of forbearance, since I have continued to make payments during the last few months.
The forbearance was initiated by the government without my request. They say it’s related to covid. I kept making payments because the current interest rate of 0% means that every penny I pay goes to principal, and because I’ve stayed employed this year so I could.
My assumption is that if I say, “Yes, let’s officially end the forbearance for me and no one else, even though I don’t have to” then when (really if) the promised student loan forgiveness comes through, it won’t apply to me.
I might already have screwed myself out of it by trying to be smart and responsible.
If this looks like it’s going to happen then we should all take out student loans. It’s an easy way to make thousands of $$.