Individuals with higher incomes are likely to get more bang for their buck following last week’s announcement that individuals making under $125,000 are eligible to have up to $20,000 of their outstanding student loan debt forgiven, but lower income households are more likely to have all of their debts forgiven, according to a report released by the JPMorgan Chase Research Institute.
The analysis also concluded that minorities are going to have more of their student loan debt canceled than white individuals.
The plan, announced by President Biden last week, will cancel $10,000 of student loan debt for individuals with incomes of less than $125,000 or households making less than $250,000. Individuals with Pell grants are eligible to have up to $20,000 canceled.
The analysis looked at 200,000 individuals with student loans to reach its conclusion. Breaking those individuals into five groups by income, the report found that 67% of individuals making less than $34,000 per year will have all of their student loan debt extinguished, compared with 36% of those making more than $116,000 annually.
Lower income households tend to hold less debt than their higher-income counterparts, according to the report. Lower income households are also more likely to have received Pell grants.
As well, for every dollar of cancellation received by individuals in the top two groups — anyone making more than $76,000 per year, households in the bottom two groups — anyone making less than $52,000 per year — will receive $0.68.
Racially, the average amount of debt that will be canceled for African-Americans is $11,258, $9,516 for Hispanics, and $8,964 for whites.
