Demand to cancel part of the record heap of US student loans of $ 1.6 trillion has risen ahead of a Biden administration.
After Joe Biden's victory over President Trump was confirmed by Electoral College, raising hopes that more permanent debt relief may be on the way, here's who owes the most to federal student loans in the US.
Few, higher-earning individuals owe much of the student loan
BofA Global, Federal Reserve
BofA Global analysts have compiled the attached chart, which shows that a relatively small group of fewer than 3.5 million borrowers with more than $ 300 billion owe most of the debt.
Each borrower in this group owes $ 100,000 to $ 200,000, possibly after funding a medical, business, or law degree, while the second largest category of borrowers with outstanding loans of $ 250 billion owes more than $ 200,000 each.
In other words, a small fraction of borrowers owe the big bucks, while most of the US student debt – 14 million – owes the federal government less than $ 10,000 apiece for their education.
"The debate over whether the idea of canceling student loans is good (effective) or bad (ineffective) has covered a wide range of views," BofA's team of analysts, led by Chris Flanagan, wrote in a weekly note.
President-elect Joe Biden suggested giving at least $ 10,000 per person in student loans as part of his emergency action plan to save the economy as COVID-19 cases set alarming records.
Back in September, Democratic Sens. Chuck Schumer (D-NY) and Elizabeth Warren (D-Mass.) Called on the next president to immediately cancel student debts of up to US $ 50,000. A suggestion from outgoing Education Minister Betsy DeVos was recently labeled a "socialist" takeover of higher education. "
"There are valid arguments on both sides of the debate, but the data show that taking a focused approach to forgiveness and / or improving existing forgiveness programs may be the best way forward," wrote Flanagan's team.
To further illustrate the debt burden, this graph shows that higher-income households owe approximately 60% of outstanding student debt and an even larger proportion of monthly payouts.
Households with higher incomes owe the most
BofA Global, Brookings Institution, Federal Reserve
But the most indebted households with student loans also tend to have the lowest unemployment rates and the highest incomes. "Therefore, forgiveness may be better geared towards those with college" or those who haven't graduated, "wrote the BofA team.
"The focus of a credit program will likely be on borrowers who are having difficulty paying back loans."
Read: Should the Biden Administration cancel student debt? Read this before you decide
During Tuesday's market action, stocks closed near all-time highs as Wall Street waited for updates from Congress on its efforts to create another pandemic relief and government spending package.
Student lender SLM Corp SLM rose by 2.5% on Tuesday and by 37.7% so far this year. Navient Corp. The NAVI rose by 2.7% in the meeting, but fell by 30.6% compared to the previous year Nelnet, Inc.. NNI was up 1.1% on Tuesday and 19% this year.
The Dow Jones industrial average
year-to-date, the Russell 2000 small cap index rose 1.1% or 5.8%
rose 2.4% on Tuesday to a record close and so far this year has increased 17.5%.
See also: Meet the real face of the student debt crisis