It is being reported that the White House will erase $10,000 of debt for borrowers who earn up to $125,000. It is also anticipated that the President will extend the repayment pause through the end of the year. So, what’s the effect of a policy such as this? Granting student debt forgiveness could have a wide-ranging impact. Over the past two years, the pause of repaying student loans has freed many Americans to chip away at other debt, or even buy homes. That’s why for many Americans, canceling student loan debt could be a shot at a more financially secure future. But some studies show that erasing student loan debt (even for just some of us) could also marginally raise inflation as more and more adults have more money in their pockets to make other purchases. And while granting student debt forgiveness will be good news for the millions of Americans struggling under the burden of student loan debt, it won’t tackle the problem of skyrocketing college tuition, which according to research done by Georgetown University, has ballooned 169% since 1980.Wages, in contrast, have only risen about 9% in roughly that same time period. This article originally appeared in ‘The Balance Today’ newsletter. You can get ‘The Balance Today’ delivered to your inbox daily, just sign up here.
