When running for the White House in 2020, one of President Biden’s policy proposals was to forgive $10,000 in student debt, potentially benefiting one in six Americans. While Biden’s debt relief has been halted by the US Supreme Court, Toke S Aidt, Zareh Asatryan and Lusine Badalyan argue that the plan helped to increase Biden’s approval in some states. This finding is reinforced by evidence from the 2018 presidential election in the Republic of Georgia, which saw a 10 percent increase in support for a candidate that had a policy to relieve bad debts. Promises of debt relief, they write, can be an important factor in winning an election.
Many democracies around the world operate substantial debt relief programs that provide consumers with bankruptcy protection or write off consumer debt in times of crisis. There are sound welfare and economic reasons for helping individuals in financial distress while also stabilizing the financial system, but this comes at the cost of creating incentives for people to take on greater risks, knowing they may not pay the full costs.
Debt relief as a tool of distributive politics
Our research shows that debt relief shares many characteristics with traditional tools of distributive politics, routinely used by political parties to sway or mobilize voters, and that it is widely employed for the purpose of influencing the outcomes of high-stakes elections. In our work, we focus on two examples: in the 2022 US mid-term elections, Joe Biden’s student debt relief announcement boosted his approval ratings, and it could still play a role in the current election; in the Republic of Georgia, writing off bad debt helped secure the victory of the current president, Salome Zurabishvili, in 2018.
Student debt relief in US is popular
The cumulative value of US student debt is approximately $1.6 trillion – about seven percent of US GDP – and is a major concern for many voters. Relieving this debt, or parts of it, has become a hot topic during recent election campaigns.
As part of his bid for the White House in 2020, Joe Biden proposed forgiving $10,000 of debt for American citizens with incomes below $125,000 ($250,000 for married couples). After his victory, in August 2022 Biden announced his intention to follow through with the plan. The plan would have benefited 43 million Americans – about one in six voters – and would have cancelled the full balance for up to 20 million borrowers. According to the Congressional Budget Office, the price tag was around $400 billion over 30 years.
Did the proposed debt relief policy improve Biden’s popularity? To find out, we compare his approval ratings — as measured monthly in online polls — before and after the announcement in states with an above-median number of student debt holders and states with below-median student debt holders. Figure 1 shows an estimate of Biden’s average approval rating in the above-median states relative to the below-median states for the six months following the announcement (along with pre-trends for the three months prior).
Figure 1 – US student debt relief policy and Biden’s approval ratings 
Notes: Figure 1 shows the estimated differences in President Biden’s approval ratings between states with above-median student debt holders and those with below-median student debt holders (y-axis) in the months before and after the announcement of the student debt relief policy in August 2022 (x-axis). The reported point estimates are relative to July 2022, and the bars represent 95 percent confidence intervals.
Clearly, the policy announcement helped. After the announcement, Biden’s approval ratings increased by about 1.5 percentage points in states with many student debt holders, relative to states with fewer. This political effect is especially notable considering that the plan was only a prospective relief promise and ultimately a non-credible one, as the US Supreme Court ruled the plan unconstitutional in June 2023.
However, we cannot claim this is a causal effect, and even if it were, showing that debt relief policies affect presidential approval ratings is not the same as proving that they can have a material effect in a high-stakes election.
“Student Debt Protest” (CC BY-NC-SA 2.0) by AAUP
Writing off bad debt in Georgia helped the incumbent win elections
During the 2018 presidential election in the Republic of Georgia – a small former Soviet state in the Caucasus that gained independence in 1991 – something unusual happened. The two main candidates, Grigol Vashadze (backed by the United National Movement) and Salome Zurabishvili (supported by the Georgian Dream party), both received about 38 percent of the vote in the first round of the election, triggering a run-off election a month later. Although they entered the second round neck-and-neck, and despite most of the other first-round candidates lending their support to Vashadze, Zurabishvili nearly doubled her votes and became Georgia’s first female president.
Between the two rounds, Prime Minister Mamuka Bakhtadze of the Georgian Dream party announced that a deal had been reached with Georgian banks to buy up and write off a large portfolio of loans that had been in default for more than a year. Over 600,000 individuals stood to benefit, with loans below a threshold of US$770 (approximately 18 percent of nominal annual GDP per capita) being forgiven. This affected about one-sixth of the electorate in a country where many struggled with excessive debt. The reported book value of the loans was US$578 million.
Bakhtadze credited the Cartu Foundation, a private foundation established in 1995 by Bidzina Ivanishvili – a billionaire businessman and founder of the Georgian Dream party – for funding the program. The debt was indeed written off as promised over the following year, with the names and amounts for each beneficiary published, allowing us to collect and geo-locate information for a representative sample of about 20,000 beneficiaries.
The results of our study of the effects of the debt relief are striking. A 10 percent increase in the amount of debt forgiven in an election district led to a seven percent increase in votes for the Georgian Dream-backed candidate, Zurabishvili, and a corresponding decrease in votes for the opposition candidate, Grigol Vashadze. The debt relief program clearly had a material impact on this high-stakes presidential election and helped Georgian Dream secure its candidate’s victory. Since the actual debt write-off occurred after the election, the effect was driven by expectations of future benefits. Voters could easily estimate ‘what was in it for them,’ as they were aware of their own debt situation. The program’s credibility was strengthened by the fact that it was funded by a private foundation, rather than public funds.
Notably, there was no differential effect on voter turnout across districts, suggesting that the program primarily induced party switching rather than voter mobilization. This interpretation is reinforced by the fact that the opposition candidate lost votes because of the program.
More debt relief promises in upcoming elections
Traditionally, researchers have focused on disaster aid or cash transfers targeted at specific voter groups, but these results from the US and the Republic of Georgia show that debt relief can also be a highly effective and relatively low-cost tool for winning elections.
On November 5th, the US will hold a presidential election, and the Republic of Georgia will hold a parliamentary election later this fall, with the issue of debt relief reemerging in both. Despite the US Supreme Court ruling Biden’s proposed debt relief plan to be unconstitutional, during the ongoing presidential campaign, first Joe Biden and later Kamala Harris have introduced revised plans for broad-based student (and medical) debt relief. The topic was also discussed during the Harris-Trump presidential debate on September 10.
In the Republic of Georgia, the incumbent Georgian Dream government appears to have remembered the lessons from 2018 and has announced plans to relieve tax-related debts for all debtors in Georgia. Time will tell if debt relief helps the ruling party secure another high-stakes election.
What is clear, however, is that debt relief programs are becoming increasingly popular and, according to our estimates, are a highly effective tool of distributive politics, albeit potentially with significant societal costs.
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