New Education Finance and Policy Study Findings Have Been Reported by Researchers at Federal Reserve Bank (Assessing the Relative Progressivity of the Biden Administration’s Federal Student Loan Forgiveness Proposal): Education – Education Finance and Policy

Education Daily Report

2024 OCT 24 (NewsRx) -- By a News Reporter-Staff News Editor at Education Daily Report -- Investigators publish new report on Education - Education Finance and Policy. According to news reporting out of New York City, New York, by NewsRx editors, research stated, “We quantify the total stock of balances eligible for the Biden administration’s 2022 student loan forgiveness proposal and examine which groups would have benefited most. Up to $442 billion in loans were eligible.”

Our news journalists obtained a quote from the research from Federal Reserve Bank, “Those who would have benefited most were younger, had lower credit scores, and lived in lower- and middle-income neighborhoods. We also find that Black and Hispanic borrowers would have disproportionately benefited from the proposal. We then compare the distribution of beneficiaries for the proposed policy to several alternative hypothetical forgiveness proposals and three existing tax credits. The additional forgiveness for Pell Grant recipients increased the progressivity of the policy at a cost of $129 billion. Reducing the income eligibility criterion in half from the proposal would have reduced the cost by nearly $100 billion and made the policy more progressive. Compared with existing tax credits, the announced forgiveness policy is less progressive than the Earned Income Tax Credit but more progressive than the 2019 Child Tax Credit and higher education tax credits.”

According to the news editors, the research concluded: “We conclude with a discussion of how each policy lever affects the progressivity of loan cancellation to help inform future policy.”

This research has been peer-reviewed.

For more information on this research see: Assessing the Relative Progressivity of the Biden Administration’s Federal Student Loan Forgiveness Proposal. Education Finance and Policy, 2024;19(4):716-733. Education Finance and Policy can be contacted at: Mit Press, One Rogers St, Cambridge, MA 02142-1209, USA.

Our news journalists report that additional information may be obtained by contacting Daniel Mangrum, Federal Reserve Bank, Res & Stat Grp, New York, NY 10045, United States. Additional authors for this research include Jacob Goss and Joelle Scally.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1162/edfp_a_00429. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.