Stop Saying Student Debt Relief Is for the Rich

When people debate whether to forgive some or all of the $1.75 trillion in student debt weighing on millions of American families, opponents often argue that it would be wasteful and unfair: Too many relatively well-off, well-educated people would benefit at the expense of all taxpayers, many of whom never had the desire or opportunity to attend college.

Reasonable as this might sound, it’s the wrong way to think about a policy that could actually do a lot of good, for both individuals and the broader economy. It relies on a misleading concept of who counts as rich, and ignores the extent to which the debt itself is a manifestation of unfairness.

True, if one looks at the U.S. population by income, most student debt is owed by the highest-earning half of households. By one estimate, this group would receive about three quarters of the forgiven dollars (in present-value terms) if all the debt were canceled. This has led economists and politicians to label the policy “regressive.”

But this analysis is flawed on many levels. For one, it’s an inappropriate way to assess the policy’s regressivity: Social Security, the country’s largest safety net program, can look regressive, too — until one recognizes that low-income participants receive larger benefits compared with what they contribute in taxes. In the case of student debt cancellation, income-based evaluation ignores people's starting positions — the household resources that determine so much in life, including whether they can attend college debt-free. In the U.S., those starting positions differ radically, in large part due to a long and ignominious history of racism that has, generation after generation, prevented Black families from building wealth.