Economists Remain Divided , on How Student Debt Forgiveness , Will Impact Inflation.<br />NBC reports that the Biden administration's <br />student loan forgiveness plan will either make <br />inflation worse or have little impact at all. .<br />According to the Committee for a Responsible <br />Federal Budget (CRFB), the plan would , “wipe out the disinflationary benefits<br />of the Inflation Reduction Act.”.<br />The CRFB estimates that the debt <br />forgiveness action would cost an , "astronomical $400 to $600 billion." .<br />Previously, the group estimated that <br />$10,000 in forgiveness would add 0.15% <br />to a commonly used gauge for inflation. .<br />NBC reports that experts at the Roosevelt Institute <br />and the Center for American Progress <br />disagree with the assessment by the CRFB.<br />They argue that the impact of inflation <br />would be small and offset by student loan <br />payments resuming on January 1 of 2023.<br />Sarah House, senior economist at Wells Fargo, points out that <br />the outcome will be hard to determine because there are , “so many moving pieces to <br />the inflation picture right now.".<br />According to House, one of the unknown <br />factors is how cancelled student debt could <br />change the way consumers spend their money.<br />NBC reports that a reduction in debt <br />could encourage people to spend more <br />and boost the economy that way.<br />According to House, the cancelling of student debt only , "addresses the symptom rather <br />than the cause of student debt.".<br />This doesn’t do anything to encourage <br />colleges to help restrain costs and limit <br />the amount of debt that students <br />are coming out with in college, Sarah House, Senior economist at Wells Fargo, via NBC
