As the president mulls Democrat calls to cancel up to $50,000 in federally-backed student loan debt via executive order, a new analysis shows how $10,000 in forgiveness would affect borrowers in each U.S. state.
Analyzing Education Department (ED) data as of September 2020, Student Loan Hero estimated that $10,000 forgiveness would cost roughly $315 billion and erase the entire balances for 34% of borrowers. (A payment pause on qualifying loans has been in effect since March 2020 and will last at least through September 2021.)
California, Texas, and a variety of states east of the Mississippi River with higher numbers of college graduates holding student debt would see the most relief from $10,000 in forgiveness. (Hover over map for more details.)
The analysis noted that cancelling $10,000 in student debt would have the most overall impact in states with smaller populations of borrowers: In Wyoming, 38% of borrowers would see their entire federal student loan balance wiped away, in Utah 37%, and in Nevada, 36%. At the other end of the spectrum, only 29% of borrowers in Maryland and Virginia would see their entire balances erased.
Preston Cooper, a visiting fellow at the center-right think tank Foundation for Research and Economic Opportunity, noted that student loan borrowers in states "where blue-collar industries are more dominant... are more likely to have taken it on to get a certificate or an associate's degree [as opposed to a bachelors degree and potentially graduate school], so the average borrower has a lot less debt."
That said, Cooper added, states where more citizens pursue college degrees "will benefit more from the $10,000 cancellation than the top line numbers let on." This is highlighted by the map above: While roughly 49,000 Wyomingites would see relief from $10,000 in forgiveness, nearly 1 million borrowers in Virginia would benefit.
Student Loan Hero first estimated how much of the roughly $1.7 trillion in total student debt is from federally-held loans, which include Direct Loans for undergraduate and graduate as well as Parent PLUS loans, and found that roughly $1.3 trillion in outstanding federal student loan debt across the country would be eligible for cancellation.
A previous analysis by Yahoo Finance found that cancellation would affect roughly $1.3 trillion in outstanding loans and that $10,000 forgiveness would erase the entire balances for 36% of borrowers at a cost of roughly $371 billion.
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Senate Majority Leader Chuck Schumer (D-NY) and Senator Elizabeth Warren (D-MA) have repeatedly urged a somewhat skeptical Biden to cancel $50,000 in federally-held student loan debt via executive action (as opposed to legislation passed by Congress).