Question A:
The administration’s loan relief plan will not have a substantial impact on inflation in either direction.
Responses
Responses weighted by each expert's confidence
Question B:
A longer-term impact of the administration’s loan relief plan is likely to be substantially higher tuition fees at some universities.
Responses
Responses weighted by each expert's confidence
Question C:
A longer-term impact of the administration’s loan relief plan is likely to be measurably higher student debt burdens in anticipation of future forgiveness.
Responses
Responses weighted by each expert's confidence
Question A Participant Responses
| Participant | University | Vote | Confidence | Bio/Vote History |
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 Daron Acemoglu |
MIT | Bio/Vote History | ||
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I never understood why student loan forgiveness should have a major effect on inflation. Of course it creates more government debt, but the effect of that on inflation seems rather small.
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 Joseph Altonji |
Yale | Bio/Vote History | ||
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I expect a small positive impact on inflation.
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 Alan Auerbach |
Berkeley | Bio/Vote History | ||
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 David Autor |
MIT | Bio/Vote History | ||
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Since no student has paid federal loan debt since the start of the pandemic, this is not an immediate inflection point in household liquidity, but it does raise lifetime wealth of borrowers -- which should spur at least a bit more spending
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 Katherine Baicker |
University of Chicago | Did Not Answer | Bio/Vote History | |
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 Abhijit Banerjee |
MIT | Bio/Vote History | ||
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 Marianne Bertrand |
Chicago | Bio/Vote History | ||
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 Markus Brunnermeier |
Princeton | Bio/Vote History | ||
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 Raj Chetty |
Harvard | Did Not Answer | Bio/Vote History | |
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 Judith Chevalier |
Yale | Bio/Vote History | ||
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 David Cutler |
Harvard | Bio/Vote History | ||
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 Angus Deaton |
Princeton | Bio/Vote History | ||
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 Darrell Duffie |
Stanford | Bio/Vote History | ||
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This is a moderate to substantial fiscal stimulus, perhaps on the order of a half trillion dollars. And probably relieves spending constraints on those with a higher-than-average marginal propensity to consume.
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 Aaron Edlin |
Berkeley | Bio/Vote History | ||
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The loan relief is not a huge change in U.S. household wealth nor income
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 Barry Eichengreen |
Berkeley | Bio/Vote History | ||
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 Liran Einav |
Stanford | Bio/Vote History | ||
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 Ray Fair |
Yale | Bio/Vote History | ||
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 Amy Finkelstein |
MIT | Bio/Vote History | ||
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 Pinelopi Goldberg |
Yale | Bio/Vote History | ||
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 Austan Goolsbee |
Chicago | Bio/Vote History | ||
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 Michael Greenstone |
University of Chicago | Bio/Vote History | ||
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 Robert Hall |
Stanford | Bio/Vote History | ||
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Inflation is up to the Fed
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 Oliver Hart |
Harvard | Bio/Vote History | ||
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 Bengt Holmström |
MIT | Bio/Vote History | ||
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 Caroline Hoxby |
Stanford | Bio/Vote History | ||
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 Hilary Hoynes |
Berkeley | Bio/Vote History | ||
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Since loans are currently not being paid - the net effect of the policy is for more loans to be paid out.
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 Kenneth Judd |
Stanford | Bio/Vote History | ||
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The amount of money is too small relative to the economy.
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 Steven Kaplan |
Chicago Booth | Bio/Vote History | ||
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With a potential $1 trillion price tag, should increase demand somewhat which will increase prices.
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 Anil Kashyap |
Chicago Booth | Bio/Vote History | ||
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We don't understand inflation very well and right now there are so many unusual factors that it is seem unlikely that there will be a substantial effect because of this.
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 Pete Klenow |
Stanford | Bio/Vote History | ||
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 Jonathan Levin |
Stanford | Bio/Vote History | ||
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Payments already were paused. Perhaps an immediate resumption with no forgiveness would j have weakened demand and affected inflation.
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 Eric Maskin |
Harvard | Bio/Vote History | ||
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In principle, the plan should be inflationary, but I don't know how strong this effect would be.
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 William Nordhaus |
Yale | Did Not Answer | Bio/Vote History | |
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 Maurice Obstfeld |
Berkeley | Bio/Vote History | ||
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 Emmanuel Saez |
Berkeley | Bio/Vote History | ||
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 Larry Samuelson |
Yale | Bio/Vote History | ||
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The loan forgiveness by itself is sufficiently small that it may have little effect inflation, but expectations are an essential force driving inflation, and the loan forgiveness can reinforce the notion that the administration is not taking effective action to stem inflation.
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 José Scheinkman |
Columbia University | Bio/Vote History | ||
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It should increase inflation but the impact should not be substantial.
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 Richard Schmalensee |
MIT | Bio/Vote History | ||
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 Carl Shapiro |
Berkeley | Bio/Vote History | ||
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 Robert Shimer |
University of Chicago | Bio/Vote History | ||
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It is inflationary, but the impact may not be substantial
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 James Stock |
Harvard | Bio/Vote History | ||
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 Richard Thaler |
Chicago Booth | Bio/Vote History | ||
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I have no idea how this program is going to work, and neither do my most informed colleagues. So offering any opinions seems premature.
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 Christopher Udry |
Northwestern | Bio/Vote History | ||
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It's too small to have a substantial impact.
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Question B Participant Responses
| Participant | University | Vote | Confidence | Bio/Vote History |
|---|---|---|---|---|
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Daron Acemoglu |
MIT | Bio/Vote History | ||
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One could write down a model in which this happens. But there is no evidence that this will happen in practice or the magnitude of any pass-through to tuition will be significant to be detected.
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Joseph Altonji |
Yale | Bio/Vote History | ||
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Alan Auerbach |
Berkeley | Bio/Vote History | ||
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David Autor |
MIT | Bio/Vote History | ||
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Weakly agree
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Katherine Baicker |
University of Chicago | Did Not Answer | Bio/Vote History | |
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Abhijit Banerjee |
MIT | Bio/Vote History | ||
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Marianne Bertrand |
Chicago | Bio/Vote History | ||
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Markus Brunnermeier |
Princeton | Bio/Vote History | ||
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Raj Chetty |
Harvard | Did Not Answer | Bio/Vote History | |
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Judith Chevalier |
Yale | Bio/Vote History | ||
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This statement has to be (other things equal) directionally collect, but I don't see the argument that this particular intervention x the possible credibility of it being one-time nature gets us to "substantially" here.
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David Cutler |
Harvard | Bio/Vote History | ||
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Angus Deaton |
Princeton | Bio/Vote History | ||
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Darrell Duffie |
Stanford | Bio/Vote History | ||
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Aaron Edlin |
Berkeley | Bio/Vote History | ||
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Government loans are a substantial share of tuition. If people view these as grants, then tuition looks cheaper.
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Barry Eichengreen |
Berkeley | Bio/Vote History | ||
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Liran Einav |
Stanford | Bio/Vote History | ||
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Ray Fair |
Yale | Bio/Vote History | ||
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Amy Finkelstein |
MIT | Bio/Vote History | ||
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Pinelopi Goldberg |
Yale | Bio/Vote History | ||
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Austan Goolsbee |
Chicago | Bio/Vote History | ||
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For-profit schools. Not from the forgiveness but from the ‘income driven repayment’ rule
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Michael Greenstone |
University of Chicago | Bio/Vote History | ||
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Robert Hall |
Stanford | Bio/Vote History | ||
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If that starts to happen, the plan will be changed (or is the IGM like the CBO in assuming no change from current law?)
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Oliver Hart |
Harvard | Bio/Vote History | ||
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There may be some increase but I don't see any reason to think that it will be substantial. There are more important factors determining tuition fees.
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Bengt Holmström |
MIT | Bio/Vote History | ||
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Caroline Hoxby |
Stanford | Bio/Vote History | ||
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It will probably increase tuition substantially at for-profit, predatory postsecondary schools. At public & non-profit schools, evidence on tuition increases induced by financial aid is weak to mixed. Some for-profit schools are now classifying as non-profit (see URL).
-see background information here |
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Hilary Hoynes |
Berkeley | Bio/Vote History | ||
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Kenneth Judd |
Stanford | Bio/Vote History | ||
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Subsidies will raise demand for college but that will push tuition up only if there is no supply response. In that case, Federal policy should turn its attention to the limited supply of college education services.
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Steven Kaplan |
Chicago Booth | Bio/Vote History | ||
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Depends on expectations of future loan forgiveness.
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Anil Kashyap |
Chicago Booth | Bio/Vote History | ||
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Probably too early to tell what the new equilibrium will be, will there be further forgiveness?
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Pete Klenow |
Stanford | Bio/Vote History | ||
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Jonathan Levin |
Stanford | Bio/Vote History | ||
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The income contingent repayment makes borrowing more attractive. Hard to know if future students will anticipate more loan forgiveness.
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Eric Maskin |
Harvard | Bio/Vote History | ||
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William Nordhaus |
Yale | Did Not Answer | Bio/Vote History | |
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Maurice Obstfeld |
Berkeley | Bio/Vote History | ||
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Emmanuel Saez |
Berkeley | Bio/Vote History | ||
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Larry Samuelson |
Yale | Bio/Vote History | ||
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Universities are adept at capturing tuition assistance in higher tuition.
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José Scheinkman |
Columbia University | Bio/Vote History | ||
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Even though it is supposed to be one-off, for profit colleges, specially, will probably argue that new loans will be only partially enforced.
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Richard Schmalensee |
MIT | Bio/Vote History | ||
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"Substantially" may be a reach.
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Carl Shapiro |
Berkeley | Bio/Vote History | ||
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Robert Shimer |
University of Chicago | Bio/Vote History | ||
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James Stock |
Harvard | Bio/Vote History | ||
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Richard Thaler |
Chicago Booth | Bio/Vote History | ||
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Christopher Udry |
Northwestern | Bio/Vote History | ||
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Question C Participant Responses
| Participant | University | Vote | Confidence | Bio/Vote History |
|---|---|---|---|---|
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Daron Acemoglu |
MIT | Bio/Vote History | ||
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Once again this type of moral hazard could happen. And this is more likely than the pass-through to tuition. But it's still uncertain. Of course, policymakers should worry about this. For these reasons, debt forgiveness by itself is highly unlikely to have been the optimal policy
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Joseph Altonji |
Yale | Bio/Vote History | ||
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Alan Auerbach |
Berkeley | Bio/Vote History | ||
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David Autor |
MIT | Bio/Vote History | ||
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Weakly agree. One can imagine amnesty cycles every 8 or 12 years, whenever Dems occupy the White House.
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Katherine Baicker |
University of Chicago | Did Not Answer | Bio/Vote History | |
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Abhijit Banerjee |
MIT | Bio/Vote History | ||
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Marianne Bertrand |
Chicago | Bio/Vote History | ||
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Markus Brunnermeier |
Princeton | Bio/Vote History | ||
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Raj Chetty |
Harvard | Did Not Answer | Bio/Vote History | |
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Judith Chevalier |
Yale | Bio/Vote History | ||
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David Cutler |
Harvard | Bio/Vote History | ||
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Angus Deaton |
Princeton | Bio/Vote History | ||
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Darrell Duffie |
Stanford | Bio/Vote History | ||
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This debt relief does seem to create a precedent, on which some students or prospective students will place some faith. That's speculative, but natural.
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Aaron Edlin |
Berkeley | Bio/Vote History | ||
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Will students take on more debt thinking it may be forgiven? No one knows for sure. But quite possible.
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Barry Eichengreen |
Berkeley | Bio/Vote History | ||
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Liran Einav |
Stanford | Bio/Vote History | ||
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Ray Fair |
Yale | Bio/Vote History | ||
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Amy Finkelstein |
MIT | Bio/Vote History | ||
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Pinelopi Goldberg |
Yale | Bio/Vote History | ||
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Austan Goolsbee |
Chicago | Bio/Vote History | ||
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You think this will be like corporate windfall tax giveaways where they do it over and over despite overwhelming evidence showing it doesn’t work?
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Michael Greenstone |
University of Chicago | Bio/Vote History | ||
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Robert Hall |
Stanford | Bio/Vote History | ||
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But limited per the previous explanation.
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Oliver Hart |
Harvard | Bio/Vote History | ||
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I don't see think that it is reasonable to suppose that loan forgiveness will be a regular occurrence just because it has happened once. It would be fool-hardy for students to make plans based on this assumption.
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Bengt Holmström |
MIT | Bio/Vote History | ||
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Caroline Hoxby |
Stanford | Bio/Vote History | ||
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All countries in the world that have created similar loan forgiveness programs generate an expectation of future loan amnesty. Thus, they have low repayment rates (below 50%) because students expect their loans to be forgiven. Students stop distinguishing between loans & grants.
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Hilary Hoynes |
Berkeley | Bio/Vote History | ||
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Kenneth Judd |
Stanford | Bio/Vote History | ||
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This could happen if there is no policy change. Better would be addressing college financing and supply issues in a credible and effective manner.
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Steven Kaplan |
Chicago Booth | Bio/Vote History | ||
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Anil Kashyap |
Chicago Booth | Bio/Vote History | ||
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Pete Klenow |
Stanford | Bio/Vote History | ||
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Jonathan Levin |
Stanford | Bio/Vote History | ||
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Eric Maskin |
Harvard | Bio/Vote History | ||
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Theory suggests that students might take on more debt. How big an effect this would be is hard to judge
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William Nordhaus |
Yale | Did Not Answer | Bio/Vote History | |
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Maurice Obstfeld |
Berkeley | Bio/Vote History | ||
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Emmanuel Saez |
Berkeley | Bio/Vote History | ||
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Larry Samuelson |
Yale | Bio/Vote History | ||
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This is the classic bail-out quandary. It is difficult to know, but one suspects that such bail-outs induce anticipation of future bail-outs.
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José Scheinkman |
Columbia University | Bio/Vote History | ||
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Even though it is supposed to be one-off, some students may be convinced by deceptive marketing by unscrupulous schools arguing that future forgiveness is probable.
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Richard Schmalensee |
MIT | Bio/Vote History | ||
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Carl Shapiro |
Berkeley | Bio/Vote History | ||
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Robert Shimer |
University of Chicago | Bio/Vote History | ||
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James Stock |
Harvard | Bio/Vote History | ||
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Richard Thaler |
Chicago Booth | Bio/Vote History | ||
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Christopher Udry |
Northwestern | Bio/Vote History | ||
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There are a lot of steps in this chain: students' borrowing response to changes in expectations about future government policy based on a change in current policy. Each is uncertain.
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