Student loan forgiveness causes questions

On August 24th 2022, U.S. President Biden announced the student loan forgiveness. The student loan forgiveness is for college students that have taken out loans for college; they are now eligible for $10,000 in loan forgiveness. But, it could be up to $20,000 if they received Pell Grants. This seems great at first sight but in the grand scheme of things it does raise problems.

This will only apply to borrowers who earn under $125,000 per year income, but if they are married then it’s $250,000. This greatly limits the amount of students who have loans and the problem this creates is for the people who don’t receive the forgiveness. Because, they could have more personal problems with the situation or some could have paid off their loan already.

Another problem arises when looking at forgiveness- inflation. Inflation is the general increase of prices and the fall in the purchasing value of money. Money loses value when we take work/energy out of it, and when student loans are paid off with no cost, then the value of the American dollar goes down.

How expensive is it? Seeing that Biden wants to pay off as many college student loans as possible means it must be a lot. The total amount of money needed can’t be determined till after October, when applications for student loan forgiveness open. Back to colleges, a likely outcome since students will be less price sensitive, colleges will increase their tuition. Where will the money come from? There has not been an official announcement, but here are possibilities; the government increases taxes for the rich or they print more money. All of these too will only cause problems. If taxes are increased for the rich then the rich will just riot and the less wealthy will be in support making the sides too riot against one another. If they print more money than inflation will increase more and that just stacks onto the problems we already have.

What if it was canceled? Sadly, it is most likely to cause problems. People, since hearing this announcement, have or will soon have planned for this act and could be depending on it. If the student loan forgiveness were to not happen now, people who have made plans may riot against it, while businesses may decrease their prices they won’t do so till after it’s official so people who spent money beforehand lost more than they would have. Because of this, there is no clear solution to this problem.

Does this make the student loan forgiveness bad? Despite the problems mentioned above, students at colleges do get their loans paid off and get a good education to help them get good job opportunities and make a greater sum of money than before. Anyone can still apply to this if they meet the requirements and have till December 31st to apply for it. This is good for the time being, but it will make things harder in the long run as inflation will still to affect them and everyone who was not forgiven will make sure their voices are heard.