President Joe Biden recently announced a plan to forgive some student loans. First, his loan forgiveness plan would erase up to $10,000 for individuals with incomes below $125,000 per year or households that earn less than $250,000. Next, it calls to cancel an additional $10,000 for individuals who had Pell Grants.
As a result, more than 40 million Americans could see their student loan debt reduced or even eliminated. The move was somewhat expected as Biden campaigned heavily on the issue. But in addition to being historic in nature, it quickly proved to be politically divisive with opponents arguing the policy is unfair to those who never took out loans or already paid them back, and quite possibly illegal as it is unclear he has the authority to make such a move.
While legal challenges are virtually certain, in the meantime the public has a vested interest in the impact of this divisive plan. As a result, families are asking how this will impact their finances. Specifically, how the change could leave more or less money in their wallets and bank accounts, and if the action could lead to increased inflation, which is already a major concern.
Expert Analysis on impacts and trends from ISEG
KSN, the NBC affiliate station serving most of Kansas, needed an economics expert who could explain the situation. As a result, they turned to the experts at the Institute for the Study of Economic Growth (ISEG). On August 25, 2022, KSN News reporter Jessica Watson interviewed Dr. Ted Bolema, Executive Director of ISEG, on air for a KNS TV News report. Subsequently, Dr. Bolema help their audience understand the unique impacts President Biden’s plan would have on Kansans.
KSN’s report focused mainly on the potential local impact. With an estimate of more than $330 billion forgiven over the 10 years for this plan. Bolema said people should be concerned about inflation.
That will have the same impact on the government deficient and presumably on inflation on more money in the economy chasing the same amount of goods and services as before.
Watch How could Biden’s federal student loan forgiveness plan impact the Kansas economy?
Watch Dr. Bolema’s entire appearance from August 25 below or at KSN News.