Most worried about the impact of student loan forgiveness on inflation

(The Hill) – Roughly six in 10 Americans – 59 percent – say they are worried that forgiving student loan debt could make inflation worse, according to a new. CNBC poll.

The survey also found that 34 percent of respondents said only the needy should have debt forgiven, 32 percent said everyone with student loan debt should be forgiven and 30 percent said no debt should be forgiven.

The news comes days after Education Secretary Miguel Cardona said an announcement from the Biden administration coming soon regarding student loan debt, just before the August 31st expiration date for a temporary pause in loan payments.

It’s unclear if officials will announce another extension of the student loan freeze or reveal the administration’s intent to cancel some of the debt per borrower.

President Joe Biden has heard calls to waive up to $50,000 per borrower, although he reportedly set a goal of forgiving $10,000 per borrower. Biden previously said he would make a final decision by the end of August.

Just over half of adults polled by CNBC — 53 percent — said the extra money from student loan forgiveness would go toward paying off other loans. Forty-five percent, meanwhile, said they would save for retirement instead.

Any student loan forgiveness announcement could come amid a period of economic uncertainty.

The inflation rate has reached a 40-year high and the economy shrank for two consecutive quarters, usually an indicator of a country in recession.

Republicans are calling for canceling student loans “wild inflation” and has been said to benefit high-income Americans who do not need relief.

GOP lawmakers have instead introduced a bill intended to block plans that would have forgiven student loan debt, though the legislation faces an uphill battle in the Democrat-controlled Congress.

Laura Beamer, lead researcher for higher education finance at the Jain Family Institute, said The Hill this month forgiving $10,000 in student debt will have a “minimal” impact on inflation.

Beamer also said it would help Americans with “higher debt to income ratios.”

“Those people are disproportionately from disadvantaged groups and low socioeconomic status groups,” Beamer said.

More than 44 million Americans collectively owe $1.7 trillion through student loans.

The Biden administration has canceled $32 billion in student loan aid for more than 1.6 million borrowers, mostly among students who were defrauded or misled by schools.

About $10 billion of that was forgiven through the Public Service Loan Forgiveness program, which forgives debt for those working in public service and other jobs after a certain period of time.

The CNBC poll was conducted by Momentive among 5,142 adults from August 4 to August 15.

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