Data vs. emotion, or why student loan forgiveness may be a bad idea

Came across this article on Wharton’s website this morning, which is based on a paper about the economic impacts of student loan forgiveness. Everyone just assumes that forgiving student loans — somewhere on the order of $1.6 trillion — would free up a bunch of money and jump the economy, i.e. younger people could buy homes, whatever whatever. Instead, this paper argues that it would increase inequality, and most of the benefit would go to those in upper-income brackets already. I will spare you all the math — if you’re into that stuff, you can read about it at the first link — but here’s some of the essence of it:

Under a universal loan forgiveness policy, in present value terms, the average individual in the top earnings decile would receive $6,021 in forgiveness, compared to $1,085 for those in the bottom earnings decile, the paper stated. In fact, households in the top 30% of the earnings distribution receive almost half of all dollars forgiven. The patterns are similar under policies forgiving debt up to $10,000 or $50,000, with higher-income households seeing significantly more loan forgiveness, the researchers write.

The benefits of student loan forgiveness are unevenly distributed also by race and ethnicity, Catherine and Yannelis found. The average loan balances are the highest among blacks at…