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Key Facts

Poorly Targeted: Student Loan Forgiveness
Unintended Consequences
Should the federal government forgive over one trillion dollars in student loans? During the coronavirus pandemic, it has already paused repayments for over a year. Canceling student debt entirely is seen by many as a necessary step to help those in need. But there are two reasons that untargeted student loan forgiveness could in fact harm the most disadvantaged Americans.
Giving to Those Who Don’t Need Help
Student loan forgiveness would primarily benefit well-off Americans. Borrowers with the largest balances are often those with advanced degrees and well-paying jobs. And spending one trillion dollars on relatively affluent degree holders would dry up federal resources that could otherwise be used for anti-poverty efforts.
Undermining Existing Programs
Second, an across-the-board policy would undermine existing student loan forgiveness programs. These programs encourage teachers, doctors, and other public servants to work in disadvantaged areas where they are needed the most. If loan forgiveness is available regardless of public service, schools and communities will lose an important recruiting tool that they depend upon.
A Better Method
Targeted assistance is a better way to benefit the people who actually need the most help, including low-income individuals who are in default or delinquent on their loans. Student loan debt won’t go away on its own, but across-the-board forgiveness is not the answer