What We Need To Know About Student Loans

During June 2023, the U.S. Supreme Court said that the Biden Administration’s student loan forgiveness program exceeded its authority.

President Biden had hoped to cancel up to $20,000 for qualifying borrowers. Affecting as many as 43 million Americans, the program could have eliminated up to $400 billion in student loans.

Let’s take a closer look at the student loan landscape.

Student Loans

To decide our response to the SCOTUS decision, we can consider student loan facts about where, who, how much, and what economists believe.

Although the vast majority of students go to public two-and four-year colleges, more than half of those with debt attend a private school:

The NY Fed tells us that a majority of student loan balances were increasing or stable between 2019 and 2021:

Meanwhile, a Washington Post graphic illustrates that more than half of the number of borrowers owe less than $20,000. However, focusing on the dollars, larger loans dominate the totals:

Correspondingly, higher income neighborhoods (shown by the gray and mustard segments of the bar) would have received the bigger share of benefits:

In addition, if the Biden plan had been implemented, then over 50 percent of the “forgiven loan dollars” would have impacted relatively young people, aged 18 to 39:

Our Bottom Line: The Economic Impact

Asked about student loans, a group of economists participated in the Booth School’s issues questionnaire initiative.

The majority agreed that student loan forgiveness would not fuel inflation:

But, they were less certain about the impact of loan forgiveness on tuition increases:

My sources and more: As always, the SCOTUS Blog was a good sources of facts about the court.  Then, for student loans, The Washington Post and Liberty Street Economics had the facts while Booth had the economic opinions. And, at econlife we had the bigger consumer debt picture.