President Biden recently decided to cancel up to $20,000 of student loan debt. That would wipe out debt completely for 20 million people — almost half the number of students who took out loans to pay for college.
Many support this effort as a move to speed up the economy and help many drowning in student debt. But others think the move is unfair and fear it could unnecessarily cause prices to rise.
“The bankruptcy process gives people the chance to wipe out their debts and start over with a reasonable chance of living a health financial life. Student debt has been excluded from that process.” — Zachary Carter, author and consultant.
Listen: The pros and cons of Biden’s student debt cancellation policy.
Zachary D. Carter is a consultant with the Hewlett Foundation’s Economy and Society Initiative, which is looking beyond neoliberalism for our economic answers. He is also the author of “The Price of Peace: Money, Democracy, And the Life of John Maynard Keynes.”
Carter says college graduates should be able to be helped, just like businesses are when they can’t afford their costs.
“The bankruptcy process gives people the chance to wipe out their debts and start over with a reasonable chance of living a health financial life,” says Carter. “Student debt has been excluded from that process, since 2005, in particular.”
Marc Goldwein is the Senior Vice President and Senior Policy Director for the Committee for a Responsible Federal Budget, a Washington DC nonprofit. He says he’s worried about price increases that will lead to a recession.
“We think that this policy that President Biden has proposed would increase the inflation rate by maybe a quarter percentage point,” says Goldwein. “That’s not massive relative to our seven percent inflation, but it’s actually very large compared to what the president and even what Congress has the power over.”