The White House argues that restarting student loan payments in early 2023 will offset any inflationary effects from handing out $300 billion for outstanding loans.
National Association of Scholars research associate Neetu Arnold champions for higher education reform and shares why Biden's student loan handout is bad for college tuition costs.stating President Biden's student loan plan would be inflation neutral are disingenuous after multiple administration officials cited economists who have made that argument.
Biden's plan, which he's implementing via executive action, would provide a handout of up to $10,000 for borrowers making less than $125,000, and double that for Pell Grant recipients. It will also continue thethrough the end of the year before resuming them. The current national debt, according to the Treasury Department, is over $30 trillion.
"Collecting more payments by ending the moratorium will mean borrowers will pull back on spending in other areas. It will have a deflationary effect," White House press secretary Karine Jean-Pierre said Wednesday. Domestic Policy Adviser Susan Rice made similar comments. Bydlak also said that despite White House framing of the student loan forgiveness as something to help the underprivileged, the policy will disproportionately help more fortunate Americans, while increasing inflation for those less well off. President Biden Wednesday announced a move to forgive hundreds of billions in student loans via executive action, which opponents say is essentially a handout to the wealthy at the expense of the working class.
"The aggregate effects from such an income boost would be small, however, with the level of GDP increasing by about 0.1% in 2023 with smaller effects in subsequent years. We would expect the effects on inflation to be similarly small," they wrote.
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