Student loan forgiveness is one of the more popular political topics in our current environment. It was announced in April 2022 that student loan payments would remain on hold until August 2022.
The announcement sparked additional discussion about forgiving federal student loans altogether. On the surface, student loan forgiveness sounds like a good idea.
Student loan debt makes up the second-largest amount of debt in the United States, behind mortgage debt. As of 2021, student loan debt totaled $1.75 trillion.
If student loan forgiveness were to happen, this begs the question of who would benefit the most? The answer is those in the upper half of the income distribution and those with graduate degrees.
In addition, student loan forgiveness would provide young borrowers with money to buy their first home or new car. In turn, these things stimulate the economy.