What should the US do about student debt?

Credit: Glen Gyssler

Jeff Cockrell | Feb 04, 2021

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The balance of outstanding student debt in the United States is large—more than $1.7 trillion—and growing. Some policy makers have suggested the US government should forgive all federally held student debt, while others have advocated forgiving a capped amount per borrower. In January, an aide to then president-elect Joe Biden revealed that Biden planned to ask Congress to forgive up to $10,000 per borrower and extend the pause on loan payments that the federal government had offered borrowers throughout most of 2020. Are debt-forgiveness policies regressive (with more benefits accruing to high earners) or progressive (with more benefits accruing to low earners)? And is extending the payment pause an efficient way to encourage pandemic recovery? To investigate these questions, Chicago Booth’s Initiative on Global Markets polled its US Economic Experts Panel.

David Autor, MIT
“Alongside my kids’ student loans, I’d like the government to pay off my mortgage. If the latter idea shocks you, the first one should too.”
Response: Strongly agree

Eric Maskin, Harvard
“Blanket loan forgiveness would help those who went to college at the expense of those who didn’t.”
Response: Agree

Emmanuel Saez, University of California at Berkeley
“Depends on how the government debt is going be repaid: progressive versus regressive taxation, or implicit inflation tax.”
Response: Uncertain

Daron Acemoglu, MIT
“Yes, this would be much better. Student debt is a problem for low- and middle-income households, not those earning more than $100k or $150k.”
Response: Agree

Judith Chevalier, Yale
“There is evidence that extant income-driven repayment plans are underutilized. Some form of ex post IDR strategy is likely sensible.”
Response: Agree

Jonathan Levin, Stanford
“Perhaps, but it seems unlikely if you’re providing funds only to people who have attended college.”
Response: Uncertain

Steve Kaplan, Chicago Booth
“I suspect you could target aid to those more in need than the typical student-loan recipient.”
Response: Disagree

Larry Samuelson, Yale

“Both would support recovery, but would be most effective if targeted to those in most need, and it’s not clear which would do this better.”
Response: Uncertain

Richard H. Thaler, Chicago Booth

“Seems like a weak stimulus. College grads are already saving a lot. It’s the bottom quartile that needs help the most and will spend it.”
Response: Disagree