A new Marketplace.org report — titled “Would canceling $10,000 in student debt really help that much?” — utilizes the expertise of UW–Madison’s Nick Hillman.
Hillman is an associate professor with the School of Education’s Department of Educational Leadership and Policy Analysis, and the director of the Student Success through Applied Research (SSTAR) lab.
The report examines the potential impact that canceling $10,000 in student debt would have on borrowers. President-elect Joe Biden has said that he would support this amount of loan forgiveness as part of the pandemic relief legislation proposed by House Democrats.
Hillman pointed out that among communities of color, data shows 17 percent of borrowers are in default and their median loan is $9,067.
Therefore, he said, “Canceling a relatively small amount of debt could go a long way for helping struggling borrowers and people of color in particular.”
Hillman also addressed the argument that forgiving so-called “risky” behavior, such as taking out loans, encourages this behavior in the future. He said that evidence for this argument is limited.
“I wish that there was some research consensus here,” he said. “What I see — and what I get very frustrated by — is the poor data quality that we have on student loan debt just doesn’t allow us to answer these questions in convincing ways.”
“The effects are all speculative. It’s all hypothetical,” he added. “It’s hard to say what kind of impact this would have on individuals or the broader economy.”
To learn more about this issue, check out the full report on the Marketplace.org website, here.