Even in a Crisis, Student Loan Forgiveness is Bad Policy

by William J. Luther
The American Institute for Economic Research

On the heels of the CARES Act, which was approved in late March, nine representatives have put forward a bill to make further emergency supplemental appropriations for the fiscal year ending September 30, 2020.

Among many, many other things (it is 1,815 pages long), the proposed bill calls for the Treasury to cover up to $10,000 in student loan payments due per borrower and private loan servicers to grant borrowers forbearance on any amount in addition to that which is covered by the Treasury through September 2021. It would also suspend the capitalization of interest and halt all involuntary collection related to private educational loans through September 2021. The student loan provisions of the bill are expected to cost the government $45 billion.

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