Democrat President Joe Biden is reportedly going to announce a massive student loan debt forgiveness plan on Wednesday, despite the ongoing inflation crisis.
The Hill reported, “The White House is expected to announce a plan to cancel a chunk of student loan debt on Wednesday, in addition to an extension of the existing payment pause, three sources with knowledge of the situation told The Hill.”
“Sources said President Biden’s intended measure will include at least $10,000 in loan forgiveness for borrowers who make less than $125,000 annually, as well as another payment freeze for roughly four months,” the outlet added. “The $10,000 figure would be the largest forgiveness of federal student loans per individual to date.”
The report comes just a week before the pause on federal student loan payments is set to expire on August 31. Meanwhile, inflation in the United States remains at nearly the highest level in more than 40 years. According to top Democrat economist Larry Summers, who served in the Clinton and Obama administrations, student loan forgiveness will make inflation worse.
“I hope the Administration does not contribute to inflation macro economically by offering unreasonably generous student loan relief or micro economically by encouraging college tuition increases,” Summers wrote in a Twitter thread on Monday. “Every dollar spent on student loan relief is a dollar that could have gone to support those who don’t get the opportunity to go to college.”
“Student loan debt relief is spending that raises demand and increases inflation. It consumes resources that could be better used helping those who did not, for whatever reason, have the chance to attend college. It will also tend to be inflationary by raising tuitions,” he continued. “The worst idea would be a continuation of the current moratorium that benefits among others highly paid surgeons, lawyers and investment bankers.”
“If relief is to be given it should not set any precedent, it should only be given for the first few thousand dollars of debt, and for those with genuinely middle class incomes,” Summers added.
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