In Reuter's, "Biden Administration Changes Student Loan Guidance, as Republican-led States File Lawsuit," I read about the pushback President Biden has faced since announcing his plan to cancel portions of student debt. One of the major issues that came to light almost after the announcement in August was that there are some 4 million people whose loans were issued and managed by private banks, but guaranteed by the federal government. The federal government and Department of Education has required that these loans be consolidated to Direct Loans in order to qualify for loan forgiveness. The states argue that the banks will lose significant customer base, and therefore, revenue. The loan forgiveness plan has received a lot of criticism for the inflationary impact it may have, but the federal government insists that the impact will be minimal as we are on track to decrease this year's deficit by $1.7 trillion. Ultimately, this lawsuit will probably have minimal impact on the policy itself so much as help determine the ways in which certain refunds will be distributed. The lawsuit may also make clearer, or bring to light, the limitations as to what the government can and cannot do in relation to financial intermediaries. Banks trend in periods of varying degrees of regulations, so this could be a very good indicator as to an upcoming recession given that banks are typically more highly regulated during recessions.
https://www.reuters.com/world/
I hope that loan forgiveness continues to be used but not overused in order to create a good balance between helping people pay off their debts and not causing too much inflation and I hope that the lawsuit helps and doesn’t make it less helpful to people with loans
ReplyDeleteThis is something that has been in the news for the last couple of years as it was a promise of Biden. I am both for and against the cancelation of some portions of student loan debt. The reason I am for it is simply because I am a college student and will graduate with loan debt, along with many others who take out loans to be able to afford the benefits of college. However, I do understand the impact that it may have on inflation and am curious if I will end up paying some portion of my student loan debt that had been forgiven but in the form of inflation. On the other hand I do recognize that inflation is consistent with the increase in real wage and maybe it will benefit me to apply for student loan debt forgiveness.
ReplyDeleteI think student loan forgiveness should be supported and continued in the US, however, it cannot be overdone. Student loan forgiveness will impact a large portion of the US's population in a positive manner and will assist them significantly in a financial manner. Student loans are difficult to pay off and take many many years. By reducing student loans, the government is also increasing the amount of disposable income held by its citizens which could lead to increased consumption. I think overall that student loan forgiveness is a good idea and will be good for the economy.
ReplyDelete