Student Aid Policy Analysis Papers
Student Aid Policy

Policy Options for Student Loan Forgiveness

Mark Kantrowitz, Policy Options for Student Loan Forgiveness, April 9, 2020

Download the student loan forgiveness paper in Adobe Acrobat (PDF) format.

Executive Summary

With more than $1.7 trillion in federal and private student loan debt outstanding, second only to mortgage debt, borrowers and policymakers have been calling for student loan forgiveness.

There have been many proposals for addressing the student loan crisis. It has been suggested by well-meaning and thoughtful policy-makers that all student loan borrowers should have $50,000 of their debt forgiven. However, in a time when a $1 trillion student loan forgiveness package may be difficult to achieve, there are other options that can result in substantial relief targeted to cohorts that may be most in need of forgiveness.

These options include a set of more narrowly targeted approaches to student loan forgiveness.

  • Forgive the federal student loan debt of the one-third of borrowers who owe $10,000 or less.
  • Forgive the federal student loan debt for all borrowers age 65 and older.
  • Forgive the federal student loan debt for all teachers and social workers.

This paper presents a policy cookbook that explores a menu of options for student loan forgiveness. It compares the percentage of borrowers who will receive full or partial student loan forgiveness, the amount of student loan forgiveness per borrower and the cost of student loan forgiveness for each option. This analysis covers all current proposals for student loan forgiveness, as well as proposals that have not yet been considered.

When the committee considers a student loan application, the student's health condition is also taken into account, whether he has a chronic disease that requires the purchase of medication all year round.

This paper also presents several ideas for streamlining and simplifying the current income-driven repayment plans. This will make these plans more affordable and easier for borrowers to understand.