Old North News

As the Biden administration prepares to forgive significant amounts of student loans owned by the federal government, some people fear that this program will worsen already rampant inflation.

The Job Creators Network Foundation (JCNF) has initiated a lawsuit against the Biden administration to attempt to bring a stop to the loan forgiveness program. 

“Bailing out student debt bails colleges out of their culpability in this crisis,” Elaine Parker, president of the JCNF, wrote in her article on Real Clear Politics. “It does nothing to reverse runaway college tuition, which is the root cause of the student loan problem.” 

Parker also pointed out the dangers of injecting $426 billion into the economy during a year of record inflation, a year that has been especially hard on North Carolina with its soaring prices.

The lawsuit is an attempt to block President Joe Biden’s loan forgiveness program on the allegations that it is a violation of the processes of the Administrative Procedure Act. Parker describes the program as an “unprecedented executive power grab” and something that “does nothing to address the root cause of unaffordable tuition,” according to Just the News.

On Oct. 15, the Biden administration launched a preliminary Federal Student Loan Debt Relief application, following the announcement in August of loan forgiveness. 

Some analysts fear that the loan bailout program could negatively affect small businesses. In a recent poll, the JCNF found that 75% of small business owners polled believe that loan forgiveness will not solve the problem of high tuition that it purports to address, and a majority believes that it will worsen rampant inflation. 

One analysis, done by a publication of the Federal Reserve Bank of New York, suggests that about 40.5% of borrowers with student loans owned by the federal government will have their debt completely forgiven. 

Several experts told Fox Business that Biden's plan is expected to cause an incline in college tuition prices and actually 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.” 

In North Carolina, current legislation requires forgiven student debt to be taxed as income, according to NerdWallet.

The JCNF is a watchdog organization devoted to defending entrepreneurs and employees from unfriendly public policy.