It’s difficult to pinpoint just how much poor, middle-class and wealthier households will benefit from President Joe Biden’s student loan forgiveness plan.
But the White House analysis measures income, rather than at the household level. Let's say each spouse in a married couple earns $70,000 a year — they'd have $140,000 of joint household income, but would count among the group earning below $75,000 in the White House income analysis.
"This isn't a giveaway for the rich," said Kent Smetters, a professor of business economics and public policy at the University of Pennsylvania. About 95% of the total benefit flows to households with less than $150,000 of income, Penn Wharton found.study supports its basic finding that the vast majority of benefits flow to low and middle earners., found that a smaller share — 51% — of total debt forgiveness would flow to the bottom 60% of households. JPMorgan defines this group as having income below $76,000 a year.
For one, each analysis uses different data sets that yield different results. The Penn Wharton estimate, for example, leverages data from the Education Department and the Federal Reserve's Survey of Consumer Finances. Due to particulars of that Fed survey, while it factors in a parent's student debt it perhaps wouldn't capture the debt of a recent graduate living at home with those parents, according to economists.
Consider other oddities such as this: The government issues Pell Grants to students based on parents' income; as long as a borrower's income is less than $125,000, they'd qualify for the Pell Grant forgiveness"bonus" based on their parents' lower incomes from years prior, Smetters said. There are also a host of financial benefits from loan forgiveness that would mostly accrue to low and middle earners but which can't be captured in these data analyses, according to education experts.
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