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Notes -
Would a student loan tax credit with identical bottom line implications be more legitimate than direct forgiveness?
No, but a reduction in marginal rates would. Lump-sum tax credits are basically welfare, with neutral or harmful incentive effects, while reductions in marginal rates have beneficial incentive effects.
The thing that's especially bad about blanket student loan cancellation is that it can't really be justified on either incentive or distributional grounds. That is, it doesn't encourage working harder or saving more, the way marginal rate cuts would, and it isn't targeted to people who are in particular need of help, the way traditional welfare is.
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