Old North News

The Biden administration has assured people that President Joe Biden’s student loan forgiveness plan won’t have any negative effect on their lives.

During a White House press briefing last month, Deputy Director of the National Economic Council Bharat Ramamurti was asked who would fund President Biden’s loan relief program.

“What I would say is that, yes, this is paid for; it is paid for and far more by the amount of deficit reduction that we’re already on track for this year,” Ramamurti said.  

Others contend that Americans, already struggling with double-digit-percentage inflation rates, are going to see even more rising costs. 

North Carolina residents have seen the costs of household goods go up 13.9% since the start of 2021, according to a State Inflation Tracker put together by Senate Republicans.

Consumer Reports said the latest consumer price index numbers last month showed 8.5% inflation in July. The consumer price index measures the change in price for a number of common household goods, including food and energy. The article pointed out that 97% of Americans were worried about increased prices due to the rise in inflation. 

Several experts told Fox Business that Biden's plan is expected to cause economic problems on several fronts, including a steeper increase in college tuition prices, which actually could add to the inflation crisis.

"Students will likely feel liberated to borrow more money on the assumption of future loan forgiveness, and universities will take advantage of the additional borrowing by raising tuition," Brian Riedl, a senior fellow in budget, tax and economic policy at the Manhattan Institute, told Fox Business. "This is pretty similar to the fact that historically 60% of all student aid increases have been captured with tuition hikes, and this will be treated like an increase in student aid moving forward, which suggests that 60% will be countered by tuition hikes.” 

A recent survey published by CNBC found that nearly 60% of Americans are concerned that student debt cancellation will only worsen existing inflation. 

“Pouring roughly a half trillion dollars of gasoline on the inflationary fire that is already burning is reckless,” Jason Furman, former chairman of the Council of Economic Advisers under the Obama administration, Tweeted Aug. 24.

As of Aug. 16, the U.S. Department of Education reports that some $32 billion in student loan relief has been approved under the Biden administration. Of this $32 billion, nearly $10 billion was approved through the Public Service Loan Forgiveness program. 

The Committee for a Responsible Federal Budget recently published a report finding that $10,000 worth of student debt cancellation would nullify any deflationary benefits from the recently passed Inflation Reduction Act. The reports also found that student debt cancellation could add 15 basis points of inflation immediately, with additional increases down the road.