Student loan forgiveness found to be weak economic stimulus

One of the many policy suggestions to stimulate the economy in the wake of the pandemic and economic collapse is student loan forgiveness. Experts at the Urban Institute take a closer look this policy option and find it to be a relatively weak economic stimulus that tends to benefit higher-income households. Forgiving student loans provides savings over time, but because it is usually structured as an overall principal reduction, some level of monthly payments is still due. This means borrowers have a small allocation of monthly cash free over time, rather than immediately freeing up substantial short-term spending money. Instead, authors suggest that targeted financial support directed to householdsmost in need would be a more cost-effective stimulus. #covid-19

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