Could forgiving student debt increase inflation?

Some lawmakers in Washington are calling on President Biden to cancel the student loan debt. Biden says he might try to forgive some federal student loans, but experts say that could increase inflation.

Imagine what student loan forgiveness would mean for you or your family members.

Americans have an estimated $1.6 trillion in student loan debt.

President Joe Biden said he might try to forgive some federal student loans.

The problem is experts say that could increase inflation.

Biden said he plans to announce his decision on federal student loan relief within the next couple of weeks.

Members of his own party are asking him to forgive $50,000 per borrower. He said he won’t do that.

Biden campaigned on forgiving a fifth of that amount, waiving what some students owe for undergraduate studies at public schools and making community college free.

He hasn’t been able to do those things yet, but he has forgiven more student loan debt than any other president.

And he’s allowed borrowers to pause payments without interest during the pandemic.

The catch with loan forgiveness is inflation.

Canceling all federal student debt could increase the inflation rate by 0.1% to 0.5% over a year.

The current proposals wouldn’t go that far.

The problem is Americans are already dealing with high prices.

About the Authors:

This Emmy Award-winning television, radio and newspaper journalist has anchored The Morning Show for 18 years.