Actually, Canceling Student Debt Will Cut Inflation
We want to fight inflation and we want to keep the labor market strong. One of the most important ways to achieve both goals is to forgive a portion of student-loan debt. And yesterday, President Joe Biden announced that he was doing just that—canceling up to $10,000 in student debt for those making less than $125,000 and designating an additional $10,000 in loan forgiveness for Pell Grant recipients. Yet critics are attacking the measure, even at its modest level and with its targeted exclusions and benefits, as inflationary and unfair.
Whatever your view of student-debt cancellation, the inflation argument is a red herring and should not influence policy. Taking that logic to the extreme, inflation; at most, its inflationary impact will be minuscule, and the long-term benefits to the economy are likely to be significant.
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