Biden considers forgiving more student debt, faces strong opposition

By Tanaz Meghjani April 30, 2022

President Biden confirmed he’s seriously considering canceling more student debt, as some Democratic lawmakers have been urging him to do, but critics worry about the impact on inflation.

Biden has already forgiven about $16 billion in student debt for approximately 550,000 borrowers who were defrauded by their institutions, have permanent disabilities, or are public service workers with income-driven repayment plans.

But this amount comprises just four percent of what he promised to forgive on the campaign trail and falls significantly short of the $50k per borrower leading Democrats have been urging him to forgive since he took office.

Debt forgiveness is politically popular among Democrats, but critics argue the policy will fuel inflation in an already unstable economic environment.

The pace of inflation is faster than it’s been in 40 years and forgiving billions in student debt will undoubtedly exacerbate the problem. It will allow millions to keep money they can then spend just as the Federal Reserve is raising interest rates to pull spending power out of the economy.

If Biden follows through on his campaign promise to forgive $10k per borrower, over 15 million borrowers will rejoin the economy as consumers with clean slates.

The alternative, however, is not much better. If Biden refuses to cancel any amount of student debt and allows the student loan payment pause to expire, millions will be left trying to make payments while they are already stretched thin due to rising prices.

We’ll know more in the coming weeks, as Biden solidifies and announces his plan to manage student debt.

The data used in this story come from the U.S. Department of Education.