Student loan forgiveness ‘could be good for the economy’
- Treasury Secretary Janet Yellen said student loan relief “could be good for the economy”.
- She added that there are “trade-offs” that should be analyzed, but she will support whatever Biden decides.
- Biden recently said a decision on canceling student loans would be made in the coming weeks.
The blanket student loan relief remains controversial, but President Joe Biden’s Treasury Secretary has suggested the relief may not be a bad thing.
“They could be good for the economy,” Janet Yellen told Georgia Senator Raphael Warnock during a senate audience Tuesday, in response to a question about the potential benefits of student loan relief. “There are trade-offs involved that need to be analyzed.”
Yellen also said she agrees with Warnock that student debt is “a substantial burden” and that the Treasury “will support whatever President Biden decides as part of his policy, and he is in thinking about how he wants to tackle student debt.” .”
The trade-offs mentioned by Yellen could refer to who would benefit from the relief. Biden said during a speech last month that a decision on student loan forgiveness would be made in the coming weeks, and he added that he was not considering $50,000 in relief, suggesting that whatever that he would implement would be closer to his $10,000 rebate campaign promise. And publicist Jen Psaki also recently confirmed to reporters that the relief will be targeted to borrowers earning less than $125,000, as Biden had suggested during the campaign trail.
Since taking office, Biden has raised concerns about canceling student debt for wealthy students at Ivy League schools, even as progressive lawmakers and pundits have pushed back on the idea. that student loan relief will benefit the wealthy. Massachusetts Sen. Elizabeth Warren, for example, argued for the phased nature of debt cancellation during a Senate hearing last week.
“It’s clear that opponents of student loan forgiveness live in a privilege bubble completely disconnected from the reality of people who borrow money to get an education,” Warren said. “99.7% of borrowers haven’t graduated from the Ivy League. Heck, 40% of them haven’t graduated at all. The majority of these loans are held by people with no wealth. And the Black borrowers aren’t just treading water trying to keep up with their payments — they’re actually falling behind.”
When it comes to the economic consequences of student debt relief, both Republicans and Democrats have been vocal. Representative Virginia Foxx, the top Republican on the House Education Committee, has consistently said canceling student debt would exacerbate inflation and cost taxpayers, with some of her colleagues saying Biden was not considering lighten loans only to win votes for Democrats in the midterm elections. .
But proponents of loan forgiveness said the debt relief would stimulate the economy, allowing borrowers to put money they would have spent on their debt into other purchases. Biden has yet to comment on the amount of relief federal borrowers will receive, but recent data provided by Warren’s office revealed that if he stuck to $10,000, it would negate balances for a year. third of the borrowers.