Student Loan Forgiveness

Assessing the potential impact

Big news out that some 43 million Americans with student loans can apply to get $10,000 in forgiveness. While not everyone will be eligible some will get a bit more forgiven under certain conditions.

Let’s just imagine a simple world through where everyone applies and gets $10,000 taken off to make a total of $430 billion in forgiven loans. If we look at a chart of student loans over time that would bring the total amount outstanding down to the black line:

Ultimately, it’s a material impact but only brings the outstanding amount back to 2016 levels! And, in reality, we’re not gonna see nearly the full amount get taken down.

So, student loan debt will remain a big deal but it’s a step to bring it down to a more manageable level. This action combined with an already slowing rate of growth could have a big impact on this metric’s future development.