Will student debt relief make inflation worse? Two Valley economists weigh in abc15
The U.S. Department of Education says right now there are over 800,000 Arizonans with student loan debt managed by the federal government. According to the Arizona Board of Regents, students at Arizona's public universities borrowed more than $800 million last year."I think it will only have a marginal effect," said Greg Barr, the editor in chief with the Phoenix Business Journal. He says that's because it's not like a stimulus check.
A senior economist with Elliott D. Pollack & Company, Danny Court, agrees but says there are still a lot of unknowns. "I don't see a lot of inflationary impact although this is a lot of spending," he said."We will have to pay that back, whether we can do that under our current tax system or if taxes have to be raised to account for that at some future point. This was not free money. It didn't come out of nowhere. It's a taxpayer-funded initiative.
The plan will erase $10,000 in federal student loan debt for those with incomes below $125,000 a year, or households that earn less than $250,000. It will cancel an additional $10,000 for those who received federal Pell Grants to attend college. Education officials say applications to apply for debt relief are expected to be available in October. It will then take about four to six weeks before that relief goes into effect.
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