Report: Widespread Student Loan Debt Forgiveness Would Do Little to Stimulate Economy – NASFAA
While proponents argue widespread student loan forgiveness has several demonstrable benefits, stimulating the economy is likely not one of them.
That’s the conclusion the nonpartisan Committee for a Responsible Federal Budget (CRFB) came to in a study that found partial cancellation — in this case $10,000 or $50,000 for each borrower with federal student loans — would produce “only 2 to 27 cents of economic activity for every dollar of cost.”
“It’s time to retire the idea that the regressive cancellation of student debt is a cost-effective way to stimulate the economy,” the report concluded.
Several lawmakers and advocates for debt forgiveness argue the issue should be viewed primarily through the lense of racial equity in addition to serving as a potential economic stimulator.
A previous study from CRFB analyzing the economic benefits of fully canceling student loan debt found that doing so would produce 8 to 23 cents of economic activity for every dollar of cost. That finding led researchers to speculate that partial student debt cancellation might have a higher multiplier, though that was not the case.