'The benefits from the pause save higher income Americans far more than their lower income peers. Whatever you call it, the real question is: Can you support a policy that is this regressive three years after the pandemic started?' -Nat Malkus
New graduates walk into the High Point Solutions Stadium before the start of the Rutgers University graduation ceremony in Piscataway Township, New Jersey.at Brookings on the regressive nature of the federal student loan payment pause titled “Student loan pause has benefitted affluent borrowers the most, others may struggle when payments resume.
Turner is correct that the pause benefitted more affluent borrowers. Her article benchmarks those costs at about $5 billion per month, a similar measureby the Committee for a Responsible Federal Budget . I have different dynamic estimates of the pause cost based on quarterly government reports on the student loan portfolio, and find the monthly cost is growing with the size of the portfolio, from about $5.29 billion at the outset of the pause to $5.91 billion according to the most recent data.
While Turner notes that higher-income Americans enjoy greater benefits from the pause, she never estimates the size of the differential. I used data on student debt held by income decile from aon the Liberty Street Economics Blog by the Federal Reserve Bank of New York to estimate the relative share of the benefits of the pause accruing across income categories. My estimates have some imprecision, but they are representative of the real differences in benefits.
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