I Asked ChatGPT What Would Happen If the Top 1% Paid Off America’s Student Debt
Written by
Vance Cariaga
Edited by
Zuri Anderson
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
Student loan debt in the United States totals around $1.8 trillion, according to recent estimates from the Education Data Initiative (EDI). That’s a big number, but it represents only a tiny fraction of the combined wealth of the richest 1% of Americans.
The top 1% saw their wealth hit a record $52 trillion during the 2025 second quarter, CNBC reported, citing Federal Reserve data. That represented a $4 trillion gain from the previous year — enough to wipe out all the nation’s student debt and still have more than $2 trillion left over.
It’s not likely that the wealthiest 1% of Americans will suddenly decide to pay off everyone else’s student debt. But if they did, the impact on the U.S. economy would be substantial.
What would happen if the top 1% paid off America’s student debt? We asked ChatGPT that question. Here’s what it had to say.
The Scale of the Problem
ChatGPT estimates that the U.S. has about $1.7 trillion in federal student loan debt — less than the overall number provided by the Education Data Initiative, but in line with the EDI’s outstanding federal student loan balance estimate of $1.661 trillion.
The debt is spread among 42.5 million student borrowers, or roughly 16% of the total U.S. adult population. The average student loan balance is $40,000 per borrower.
Wiping out all that debt would obviously have a profound impact on the financial lives of the borrowers. But the impact would also spread to all corners of the U.S. economy, according to ChatGPT.
The Economic Impact
Here are some of the economic effects if the top 1% were to pay off all student debt in the U.S.:
- Immediate boost in consumer spending. Most borrowers would have hundreds of dollars in additional disposable income each month, which means more money would flow into the economy to pay for homes, cars and consumer goods. ChatGPT estimates that all this spending would boost the GDP by 0.3% to 1% a year.
- Less wealth inequality. Wealth inequality would “narrow a bit” but “not dramatically,” according to ChatGPT. The top 1% might lose around 3% to 4% of their total wealth. The bottom 90% would “gain relief” but not actual wealth transfers beyond debt cancellation.
- Inflationary pressures: Because there would be a “sudden surge in spending power,” it could cause short-term inflation — especially in housing and services. The magnitude depends on whether the payoff is done gradually or all at once.
- Credit and interest rate impacts: Banks and loan servicers would lose out on future interest payments, which could tighten credit markets slightly since lenders rely on that income stream.
Other Impacts
Beyond the economic impact of having the top 1% pay off student debt, it would have a number of social and political effects, as well. Here are some cited by ChatGPT:
- Financial relief for younger generations. One of the biggest financial stressors facing millennials and Gen Zers is their monthly student debt payment. Having that debt disappear will improve their mental and physical health, improve their productivity and lead many to buy homes and start families earlier.
- Cultural shift in attitudes toward higher education. An end to student debt could “reignite” debates about tuition costs and public funding of education. Universities might face pressure to reform pricing and reduce their dependence on student loans.
- Public perception of the wealthy. If the top 1% voluntarily agreed to pay off all student debt, they would gain “significant goodwill.” But if it were mandated through either taxation or policy, it could “fuel political controversy” over fairness and economic freedom.
More From GOBankingRates
