As President-elect Joe Biden prepares to take his place in the White House, calls for cancelling all or at least a portion of U.S. student loans have risen to a fever pitch. With data from the U.S. Department of Education, analysts at Bank of America (BofA) found that only a relatively small group of borrowers owe the biggest chunks of debt—just 3.5 million borrowers owe more than $300 billion. Each borrower in that group owes between $100,000 and $200,000. However, the biggest number of borrowers is found among those who owe less than $10,000. So the largest number of borrowers, by far, could be helped by a forgiveness of, say, the first $10,000 of student debt. This might also avoid some of the “moral hazard” that would accompany outright forgiveness of larger debts. (Chart from Bank of America, Data from Department of Education)
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December 21, 2020