Grand Canyon Times

Deputy Director of the National Economic Council (NEC) Bharat Ramamurti recently claimed that President Biden’s student loan forgiveness plan will be funded by a portion of this year’s projected $1.7 trillion in deficit reduction.

“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 during an Aug. 26 White House press conference.

As of August 16, 2022, the Department of Education reports that $32 billion in student loan relief has been approved under the Biden administration with nearly $10 billion being approved through the Public Service Loan Forgiveness program.

A recent survey published by CNBC found that nearly 3 in 5 Americans are concerned that student debt cancellation will only worsen existing inflation.

Several experts told FOX Business that Biden's plan is expected to cause an incline in college tuition prices and increase inflation. 

“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," said Brian Riedl, a senior fellow in budget, tax and economic policy at the Manhattan Institute, told FOX Business. “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.”

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 increased prices due to the rise in inflation.

Arizona residents have already seen the costs of household goods go up 15.4% since the start of 2021, according to a report by the Joint Economic Committee Republicans.

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 reports also found that student debt cancellation could add 15 basis points of inflation immediately, with additional increases down the road.