If relief is to be given it should not set any precedent, it should only be given for the first few thousand dollars of debt, and for those with genuinely middle class incomes.

— Lawrence H. Summers (@LHSummers) August 22, 2022

Cancellation of all student loans would increase inflation by 0.1 to 0.5 percentage points, incentivize higher tuition prices and make it more difficult to reach inflationary goals, as would a continued moratorium on student loan payments, the Committee for a Responsible Federal Budget reported in February. Total student loan forgiveness would disproportionately fund the wealthy, who typically have larger loans and higher-paying careers, according to a study by the Becker Friedman Institute at the University of Chicago.

“Households in the top 30 percent of the earnings distribution receive almost half of all dollars forgiven,” in a universal forgiveness scheme, the University of Chicago study states. “These patterns hold under cap policies, with higher-income households benefiting from more loan forgiveness.”

The authors argue instead for a transition to more friendly “income driven repayment,” or IDR, plans, which have individuals make payments based on their income until a certain amount of time, typically 20 to 25 years, has passed, at which point the remaining balance is forgiven. In one example plan devised by the authors, the bottom half of earners would receive three-fifths of the loan forgiven, while borrowers in the top 30% would receive only one-fifth.

As of March 2021, around 45% of federal student loan debt, estimated at $1.6 trillion, was held by the top 10% of borrowers owing $80,000 or more, according to a 2021 report by College Board. At the same time, 54% of borrowers owed $20,000 or less, with the average debt of a loan recipient being $28,400 upon receiving a bachelor’s degree, according to College Board.

The Biden administration has so far not signaled any support for more than $10,000 in forgiveness per borrower, despite pressure from some Democrats to raise this number to $50,000, according to The Hill.

In the event of loan forgiveness, 53% of debt holders say they would pay off other loans, with 45% saying they would save for retirement, according to the CNBC poll.