The Sconi

With the question of how President Joe Biden will fund his massive student loan forgiveness plan in the face of runaway inflation, fears the plan will ultimately do more harm than good in driving up costs in almost every area for virtually every American are on the rise.

During a recent White House press conference to highlight the plan, National Economic Council (NEC) Deputy Director Bharat Ramamurti attempted to alleviate fears when asked how the program would be paid for.

“What I would say is that, yes, this is paid for; it is paid for and far more by the amount of deficit reduction that we’re already on track for this year,” he said.

Ramamurti’s words have done little to convince a group of experts recently appearing on FOX Business to warn that the administration’s plan only seems destined to trigger even larger jumps in tuition prices while adding to the overall inflation crisis.

"Students will likely feel liberated to borrow more money on the assumption of future loan forgiveness, and universities will take advantage of the additional borrowing by raising tuition," said Brian Riedl, a senior fellow in budget, tax and economic policy at the Manhattan Institute. "This is pretty similar to the fact that historically 60% of all student aid increases have been captured with tuition hikes, and this will be treated like an increase in student aid moving forward, which suggests that 60% will be countered by tuition hikes."

At the same time, a recent survey published by CNBC found that nearly 3 in 5 Americans are concerned that student debt cancellation will only worsen existing inflation.

“Pouring roughly half trillion dollars of gasoline on the inflationary fire that is already burning is reckless,” tweeted Jason Furman, former chairman of the CEA under the Obama administration.

Here in Wisconsin, residents have already seen the costs of household goods rise by 14.1% since the start of 2021, according to a State Inflation Tracker report from July 2022.

Earlier this summer, the Department of Education released details outlining that at least $32 billion in student loan relief had already been greenlit by the Biden administration, with just over a third of the funds being approved through the Public Service Loan Forgiveness program.

As recently as in July, Consumer Reports highlighted the latest Consumer Price Index numbers, which were already at 8.5% with 97% of Americans expressing concern about prices growing even higher due to rising inflation. The Consumer Price Index measures the change in price for a number of common household goods, including food and energy.

The Committee for a Responsible Federal Budget recently published a report detailing that $10,000 worth of student debt cancellation would cancel out all deflationary benefits from the recently passed Inflation Reduction Act. The reports also found that student debt cancellation could add 15 basis points of inflation immediately, with additional increases still to come.