Eliminating all student debt has become a fashionable idea on the left, prompting New York Times opinion columnist David Leonhardt to remind progressives that wiping away $1.5 trillion in student loans would be, in his words, “a giant welfare program for the upper middle class.”
He’s correct. An analysis by the Urban Institute shows that the top 25% of American households by income hold nearly half of all student debt—and the bottom 25% holds just a tenth of it. Canceling all outstanding student loan balances would therefore deliver $5 to rich Americans for every $1 given to poorer families. There’s nothing progressive about a policy like that. However, Leonhardt’s proposed alternative, expanding the income-based repayment program, suffers from the exact same flaw.