JACKSONVILLE, Fla. – After President Joe Biden announced millions of people will have student loan debt forgiven, News4JAX viewers both for and against the plan were quick to share their thoughts.
More than 40 million Americans could see their student loan debt reduced — and in many cases eliminated — under the long-awaited forgiveness plan Biden announced Wednesday, a historic but politically divisive move in the run-up to the midterm elections.
Fulfilling a campaign promise, Biden is erasing $10,000 in federal student loan debt for those with incomes below $125,000 a year, or households that earn less than $250,000. He’s canceling an additional $10,000 for those who received federal Pell Grants to attend college.
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It was a relief to some, but others expect consequences.
Like on News4JAX Insider who said in part, “It will hurt the economy and help fuel more inflation.”
Some said student loan payments that are cut or cleared could give people more money to spend elsewhere.
Critics of the plan think more money to spend means more inflation problems.
News4JAX spoke with an economist about this idea.
“I believe the impact on inflation will be very muted,” economist and financial expert Joe Krier of Tidal Flow Trading said. “And if we want to put that into perspective, the relief that’s provided to taxpayers out of this program is about five to $800 billion spread over about 10 years. And the stimulus programs that we just had to revive ourselves from COVID were $2 trillion in two years. So it’s actually kind of, not small change, but it’s a much smaller piece of the pie than what’s been going on in the last few years.”
Krier said most of the people benefiting from this plan make lower and middle income which is a lot of people, most of them who took out loans to get an education.
He said the relief could give them a little less stress now, but what does that mean for future college students?
“Yeah, it’s it’s kind of a tough call. And I mean, you know, inflation in education has tripled inflation in the rest of the economy over the last 30 years,” Krier said. “It’s just a demand situation. So this has been kind of bubbling for years, and this program probably won’t have much of an effect on that.”
An estimated 20 million people will have all their student debt forgiven.