One of the nation’s top economists is sounding the alarm over the Biden administration’s efforts to forgive student loans – suggesting it will send inflation soaring.
Larry Summers, who served two Democratic presidents, condemned any plan to cancel student loans with a warning that it will only drive prices up higher at a time when inflation is crushing the average American consumer.
“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,” Summer said.
Summers said that sweeping “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,” Summers explained.
Summers’ criticism comes as Biden intends to forgive $10,000 of student loan debt per American who earns $125,000 per year or less.
Meanwhile, the Penn Wharton Budget Model released a preliminary analysis which warned that the Biden admin’s plan is going to cost taxpayers a whopping $300 billion.
“We estimate that a one-time maximum debt forgiveness of $10,000 per borrower will cost around $300 billion for borrowers with incomes less than $125,000,” the analysis said.
“This cost increases to $330 billion if the program is continued over the standard 10-year budget window,” it added. “Eliminating the borrower income limit threshold produces a 10-year cost of $344 billion.“
If Biden were to edit this plan slightly and forgive at least $50,000 of student loan debt per borrower as far-leftists have demanded — the analysis said it would cost taxpayers $980 billion.
On top of that, there have been reports that additional forgiveness could come for certain segments of the population – suggesting they would give preferential treatment to minorities.
Senior Vice President and Senior Policy Director for the Committee for a Responsible Federal Budget Marc Goldwein added that the cancelation of student loan debt will “make the Fed’s job harder and that means it’s going to increase the risk they’re going to have to drive us into a recession to get inflation under control.”
Others have pointed out that forgiving student loan debt provides a reward to those who have not bothered to pay off their loans – while punishing hard working Americans who have sacrificed to pay off their own student debt.
Not to mention how unfair it is to those who made the choice not to attend college — oftentimes hoping to avoid racking up such debt, but will now be forced to foot the bill for others.