This is convenient for student loan borrowers. But it is by no means fair to other Americans who struggle just as much with rising inflation.
President Joe Biden recently extended the federal student loan payment pause until August, which constitutes the seventh such extension since March 2020. The extension buys time for the administration to decide whether to make taxpayers pay off all $1.45 trillion of student debt—a key campaign promise. As the midterms are fast approaching, the next several months will be crucial for the administration.
Some Democrats believe Biden’s pause is too moderate and have reignited calls for massive loan cancellations. But what they miss is that the student loan pause is already forcing U.S. taxpayers to absorb college debt.
How can this be? It is the natural consequence of two factors: the 0 percent interest rate on federal loans during the pause, and rapid inflation.
The 0 percent interest rate already cost taxpayers a substantial amount due to the significant default rates on student loans. But rapid inflation—which was 8.5 percent in March—compounds the effects of the interest rate.
Borrowers benefit from inflation because their loans become worth significantly less than their original value. In other words, just as inflation devalues your savings, it also devalues your debt. And when inflation is high, that devaluation occurs at a rapid pace.
Each extension results in higher losses to taxpayers due to the loan devaluation. And the borrowers can reduce their debts simply by deferring payments.
It is discrimination & they will be sued for it
I will go to college > the most expensive one > so you can Forgive MY student debt !!!!
Since I paid off my student loan will the government sent me a check to reimburse me?
Sorry chump your reimbursement funds have been used to buy cell phones for illegals
crossing the Southern Border!
Hey Americans!! Have we had enough yet?!