05/19/2024

Biden says resuming student loan payments will prevent handout from having a ‘meaningful impact on inflation’

Despite increasing the debt, Biden said he would ‘never apologize’ for helping the ”middle class.”

Biden on Wednesday claimed that his administration’s move to restart frozen federal student loan payments at the end of the year is an “economically responsible course” that will prevent his targeted student loan cancellation from having a “meaningful effect on inflation.”

https://twitter.com/Breaking911/status/1562524644170575874?s=20&t=nqsp2k4vD0Td7x93o3VLTw

Biden announced Wednesday that he will deliver on a campaign “commitment” to cancel $10,000 of federal student loan debt for certain borrowers making less than $125,000 per year, and up to $20,000 for Pell Grant recipients, while extending the pause on federal student loan payments through the end of the year.

Biden said during remarks at the White House Wednesday that by resuming student loan payments that have been frozen during the COVID pandemic “at the same time as we provided targeted relief,” his administration is taking an “economically responsible course.”

“As a consequence, about $50 billion a year will start coming back into the Treasury because of the resumption of debt,” Biden said, adding that experts “agree that these actions taken together will provide real benefits for families without meaningful effect on inflation.”

According to a Penn Wharton Budget Model, a one-time maximum debt forgiveness of $10,000 for borrowers who make less than $125,000 will cost around $300 billion for taxpayers. Some economists argue that will spur inflation. The $300 billion adds up to about the amount of deficit reduction included in the so-called Inflation Reduction Act passed earlier this month.

Senate Minority Leader Mitch McConnell slammed the move, saying Democrats have “found yet another way to make inflation even worse, reward far-left activists, and achieve nothing for millions of working American families who can barely tread water.”

Biden brushed off claims that the plan would add to the debt, citing previous debt reduction and declaring that he would “never apologize” for helping the “American middle class.”

The nation’s federal student debt now tops $1.6 trillion after ballooning for years. More than 43 million Americans have federal student debt, with almost a third owing less than $10,000 and more than half owing less than $20,000, according to the latest federal data.

The national debt, according to the Treasury Department, currently sits at $30.7 trillion.

The announcement comes as the United States is facing record-high inflation. But when asked if the plan would increase inflation, a senior administration official said the steps the Biden administration is taking will offset each other, noting there are “certain conditions and assumptions under which it could well be neutral or deflationary.”