Most of the benefit of erasing college loans would go to households earning at least $80,000, new analysis finds.
The plan under consideration by White House officials would cancel up to $10,000 in student loans per borrower, although that would likely be limited to those with annual income of no more than $125,000. People who earn above that threshold wouldn't qualify for forgiveness.
Now, a new analysis estimates the total cost of forgiving that debt: almost $300 billion in the first year, to the Penn Wharton Budget Model, a group of economists and data scientists at the University of Pennsylvania who analyze public policy to assess their economic and fiscal impact. The benefit of erasing billions in college loans would mostly go toward Americans higher up the income ladder, the analysis also found. More than two-thirds of the debt forgiveness would help people in the top 60% of the income distribution — or those who earn $82,400 or more per year.
That could raise questions about the policy's fairness. According to the Federal Reserve Bank of St. Louis, median household income in the U.S. in 2020 was roughly
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