Great Lakes Wire

Cynicism regarding President Joe Biden's student loan forgiveness plan comes from economists who believe that it will contribute to the ongoing inflation.

Several experts told Fox Business that Biden's plan is expected to cause an increase in college tuition prices and actually add to the 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," Brian Riedl, a senior fellow in budget, tax and economic policy at the Manhattan Institute, told Fox News. "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."

During a White House press conference, Deputy Director of the National Economic Council Bharat Ramamurti was asked who would fund Biden’s loan relief program.

“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,” Ramamurti said, according to the White House Press Briefing.

A recent survey published by CNBC found that nearly 60% of 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,” Jason Furman, former chairman of the Council of Economic Advisers under the Obama administration, tweeted Aug. 24.

As of Aug. 16, the U.S. Department of Education said some $32 billion in student loan relief has been approved under the Biden administration. Of this $32 billion, nearly $10 billion was approved through the Public Service Loan Forgiveness program.

The Committee for a Responsible Federal Budget recently published a report finding that $10,000 worth of student debt cancellation would nullify any deflationary benefits from the recently passed Inflation Reduction Act. The report also found that student debt cancellation could add 15 basis points of inflation immediately, with additional increases down the road.

Last month, Consumer Reports highlighted the latest consumer price index numbers, showing 8.5% inflation in July. The consumer price index measures the change in price for a number of common household goods, including food and energy. The article pointed out that 97% of Americans were worried about increasing prices due to the rise in inflation.

Michigan residents have already seen the costs of household goods go up 14.1% since the start of 2021, according to the State Inflation Tracker, which was put together by Senate Republicans.