The Cost of Forgiving Student Debt and the Laffer Curve

Several news articles have reported on the potential costs of the Obama administration's plans to forgive some of the student debt associated with Corinthian Colleges. Corinthian is a for-profit college that recently went bankrupt. It has been accused of using fraudulent tactics to get students to take out large loans to pay for its tuition.

In projecting the costs to the government, these pieces neglect to take account of the positive effect on incentives that eliminating this debt would hav...