Despite her best intentions and her description of the plan as progressive, a quick analysis finds the [Senator Elizabeth] Warren proposal to be regressive, expensive, and full of uncertainties. As I show below, the top 20 percent of households receive about 27 percent of all annual savings, and the top 40 percent about 66 percent. The bottom 20 percent of borrowers by income get only 4 percent of the savings. Borrowers with advanced degrees represent 27 percent of borrowers, but would claim 37 percent of the annual benefit.

This is from Adam Looney, “How progressive is Senator Elizabeth Warren’s loan forgiveness proposal?“, Brookings Institution, April 24.

Looney, an economist at Brookings, lays out why the above pretty much has to be the case.

He writes:

The simple fact is that it’s hard to design a progressive and coherent loan relief policy. In one way, it’s like the subprime crisis: too many borrowers were fooled (or fooled themselves) into taking out speculative loans that were impossible to repay. But the vast majority of prime borrowers were responsible, made conservative choices, and continued to pay their loan obligations. We struggled then to differentiate the deserving from undeserving, responsible from irresponsible, and with the potential costs of widespread write-downs.

Debt relief for student loan borrowers, of course, only benefits those who have gone to college, and those who have gone to college generally fare much better in our economy than those who don’t. So any student-loan debt relief proposal needs first to confront a simple question: Why are those who went to college more deserving of aid than those who didn’t? More than 90 percent of children from the highest-income families have attended college by age 22 versus 35 percent from the lowest-income families.[2]Workers with bachelor’s degrees earn about $500,000 more over the course of their careers than individuals with high school diplomas.[3] That’s why about 50 percent of all student debt is owed by borrowers in the top quartile of the income distribution and only 10 percent owed by the bottom 25 percent. Indeed, the majority of all student debt is owed by borrowers with graduate degrees.[4]

There’s much more there.

This analysis leads to a further question, one that Armen Alchian addressed in 1968 in his classic “The Economic and Social Impact of Free Tuition,” New Individualist Review, Winter 1968. That is: Is subsidized tuition, even aside from loan forgiveness, a transfer from the relatively poor to the relatively rich? Alchian answers yes, using the same kind of analysis: looking at the lifetime income of those who complete college relative to those who don’t.