The Earned Income Tax Credit (EITC) provides substantial financial support to low-income Universal basic income has gained renewed interest among policymakers and researchers in the U.S. While research indicates that unconditional cash transfers produce diverse benefits for households, public support lags in part due to the predicted unemployment and frivolous As policy-makers grapple with whether or not to forgive student debt, for who, and how much, it is important to explore how student debt forgiveness would relate to intended household decisions and behaviors. We conducted a survey experiment that asked participants with student debt to imagine a scenario in which the federal government forgave a certain amount of student debt. We then had these participants report on how this would affect their decisions and behaviors. 1,053 participants were randomly assigned to one of four conditions that offered $5,000, $10,000, $20,000, and complete debt forgiveness. Our results indicate that student debt is strongly influencing intended decisions and behaviors that can have large implications for household economic stability (e.g., emergency savings) and mobility (e.g., saving for a down payment on a home). These results also demonstrate that the amount of student debt forgiveness matters, with larger amounts of forgiveness, more effectively motivating both short- and long-term saving and investment intentions. Finally, we also observe that the proportion of student debt forgiven and the income of the borrower alter the relationships between the amount of debt forgiven and intended behaviors.
Jabbari, Jason; Roll, Stephen; Despard, Mathieu; Hamilton, Leah. Experimental Evidence on Consumption, Saving and Family Formation Responses to Student Debt Forgiveness (June 17, 2022). http://dx.doi.org/10.2139/ssrn.4139814