: Goldman Sachs has run the numbers on student-loan relief. Here’s their assessment.

by | Aug 25, 2022 | Stock Market

The White House on Wednesday finally released its program for student loan relief, saying they will cancel up to $20,000 in debt per borrower to households earning as much as $250,000. Read: Biden canceling $10,000 of student loans, $20,000 for Pell grant recipients

Goldman Sachs economists Joseph Briggs and Alec Phillips ran through the numbers and gave a conclusion perhaps jarring to the plan’s supporters and detractors alike — that it won’t amount to much, saying the headlines are bigger than the macroeconomic impact. If all borrowers eligible for the program enroll, it will reduce student loan balances by around $400 billion, or 1.6% of GDP. That’s not a given — the economists point out that previous programs to reduce loan payments didn’t have full enrollment. The economists then drew on both Education Department data, as well as the Federal Reserve’s survey of consumer finances, to estimate the boost to income and consumption. Though lower-income households will see the largest proportional cut in debt payments, most of them don’t have student debt. The wealthy, on the other hand, are limited by the income thresholds attached to the relief. Middle-income households will benefit the most.

Article Attribution | Read More at Article Source

Share This