There are quite a few articles being published these days in anticipation of Joe Biden’s repeated and reaffirmed campaign promise on educational loan forgiveness. There’s a statistic that’s frequently cited in the discussion: an average of $50,000 in educational debt.
But there’s another statistic that’s just as important, quoted in this article at Forbes. The median student loan debt is $17,000. To get the average debt you sum the total amount of debt and divide by the number of borrowers. The median debt on the other hand is the amount for which half of the borrowers owe more and have less.
With such a large discrepancy between the average and the median it suggests that most borrowers owe a lot less than $50,000. My intuition is that there’s a fairly small number, probably mostly professionals, with educational debt much higher than $50,000.
I don’t think that educational debt forgiveness is a good policy at all but how you craft it depends on what you want to accomplish. If you were to set the cap on forgiveness at $30,000, I think that most of the people you’d be helping would be the poor and the middle class while when you set it at $50,000, by far the greatest benefit would be to the upper middle class and the rich. I’d means test it and limit forgiveness to certain degrees.
It would be nice to know what the standard deviation is but that’s another subject.