The White House estimates 90% of the debt relief would go to people making under $75,000 a year. Economists worry President Biden's plan to forgive student loans could encourage more people to take on debt in the hopes of also being forgiven. Students from George Washington University wear their graduation gowns outside of the White House in Washington, D.C, on May 18. But they might bristle at underwriting debt relief for a business school graduate who's about to go to Wall Street and earn six figures. They might not mind subsidizing a newly minted social worker, making $25,000 a year. Some believe that transfer effectively penalizes people who scrimped and saved to pay for college, as well as the majority of Americans who don't go to college. Helping lower income Americans or a sop to the rich?Īnother big point of contention has to do with fairness.įorgiving loans would would effectively transfer hundreds of billions of dollars in debt from individuals and families to the federal government, and ultimately, the taxpayers. Restarting them will take money out of borrower's pockets, offsetting some of the additional spending power that comes from loan forgiveness. Those payments have been on hold throughout the pandemic. The White House also notes that borrowers who still have outstanding student debt will have to start making payments again next year. Instead, they'll be relieved of making loan payments over many years. Borrowers won't suddenly have $20,000 deposited in their bank accounts. Not all economists believe the debt forgiveness will do much to fuel inflation.ĭebt forgiveness is not like the $1200 relief checks the government sent out last year, which some experts say added to inflationary pressure. Inflation remains near its highest rate in 40 years and the Federal Reserve is moving to aggressively raise interest rates in hopes of bringing prices back under control. So the debt forgiveness has the potential to raise the living standard for tens of millions of people.Ĭritics, however, say that additional spending power would just pour more gasoline on the inflationary fire in an economy where businesses are already struggling to keep up with consumer demand. People whose payments are cut or eliminated should have more money to spend elsewhere – maybe to buy a car, put a down payment on a house or even put money aside for their own kids' college savings plan.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |