INDIANAPOLIS, Ind. (NETWORK INDIANA): President Biden is expected to lay out soon his plan to forgive billions of dollars in student loan debt for thousands of Americans.’
The details of the plan have yet to be made public, but the gist of it is expected to forgive up to $10,000 in loan debt for Americans who make less than $125,000 per year. Biden has been under some political pressure from Democrats to push policy on student loan forgiveness.
As you might expect, experts are weighing in from both sides of the argument as to whether the president should follow through on the plan.
“In the case of $10,000 of student loan debt, if you were to take that away from anybody’s balance, it would probably cut off about $100 dollars a month in student loan payments over those next ten years,” said Phil Schuman, executive director of financial wellness and education at Indiana University.
Talking to WISH-TV, Schuman believes that once those monthly payments are cut off that will redirect that $100 a month back into the economy.
But, other people are far more skeptical. One of those people is Dr. Matt Will, an economist at the University of Indianapolis.
“This is going to be another $300 billion that’s going to have to be paid for,” Will said. “How will it be paid? By inflation. Spending $300 billion will cause inflation and we’re all going to lose, including the people who get the $10,000 forgiveness.”
Schuman doesn’t see it that way.
“It’s going to cost the government some money in order to do this,” Schuman said. “But at the same time, I think it’s going to come back in the form of helping families get back on their feet and sort of being able to contribute to the economy in other ways besides just paying off debt.”
However, Will said nothing from the government is “free” and that something (or someone) will have to pay for all that debt that is being forgiven. He believes it will be both those who are in student loan debt as well as people who did not go to college and are making less because they don’t have a college diploma.
“The reality is, and I think everyone knows this, it is 100-percent political pandering,” said Will. “People with a bachelor’s degree make $20,000 a year more than someone with a high school diploma (on average). Yet, the person with a bachelor’s degree is going to get another $10,000 gift from the government, paid for, obviously in part, by those making $20,000 a year less.”
President Biden is also expected to announce an extension of a moratorium on student loan payments until January.