Democratic student loan forgiveness plan primarily benefits top earners
by Tyler Van Dyke
| February 06, 2021 06:19 AM Sen. Chuck Schumer and other congressional Democrats have called on President Biden to cancel as much as $50,000 in federal student loans, but economists warned that such proposals primarily benefit those who are already well-off.
Citing a record $1.68 trillion national student loan balance, Democrats on Thursday urged Biden to use an executive order to forgive student loans, which Schumer called "a huge anchor on our entire economy."
"There's very little that the president could do with a flick of a pen that would boost our economy more than canceling $50,000 of student loans," Schumer said when he announced the resolution, which would forgive all debts for 36 million people, or roughly 80% of all student loan borrowers, according to CNBC.
But a report from the Federal Reserve released in September 2020 found that the majority of student loan debt, roughly 60%, is held by the top 40% of income earners, who account for about three-quarters of all loan payments. The lowest-income earners hold less than 20% of all federal student loan debt by comparison.
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