VERIFY BGSU, UT faculty provide insight into student loan relief

A burning question for many is when will borrowers see this relief? Joshua Boston, a professor at Bowling Green State University, said it wouldn’t be instantaneous.

TOLEDO, Ohio — President Joe Biden on Wednesday announced plans to provide $10,000 in student debt forgiveness to millions of Americans. Borrowers earning less than $125,000 per year or families earning less than $250,000 would qualify.

A burning question for many is when will borrowers see this relief? Joshua Boston, a professor at Bowling Green State University, said it wouldn’t be instantaneous.

“It will involve a lot of rulemaking by the Department of Education,” said Boston, an assistant professor of political science. “They will have to coordinate with these loan officers to see who is eligible for loan forgiveness, debt forgiveness and other things.”

Therefore, there is no exact date when anyone will see the cancellation of the debt.

The United States has also been facing record inflation recently and many are wondering where the money will come from.

Will debt cancellation help or hurt the current economy?

Collin Gilstrap, an associate professor of finance at the University of Toledo, said borrowers will have more money without the debt, and what they decide to do with that money will make all the difference.

“If they save him, that’s great,” Gilstrap said. “It shouldn’t create inflation. But if they go out and decide to spend it today, that’s when we start having more demands for goods and services which continue to drive up inflation. “

Boston said the extended pause in payments has allowed some people to use money they would spend paying off student loans on things they need.

“I haven’t taken my loan payments and put them in an account waiting to be paid off,” Boston said. “I’ve used the money in other ways over the last two years. It’s not like, ‘Oh, my loans are on hold for another three, four months, and maybe some of my loans will be cancelled.’ It doesn’t change how I spend my money right now.”

It is therefore too early to say how the loan forgiveness may or may not affect inflation.

These questions that Biden’s motives behind the announcement may ask, is it just a push to get voters to the polls?

“The timing was deliberate by the Biden administration,” Boston said. “By President Biden, and everyone in the White House. Even the chief of staff, Ron Klain, was quoted, it’s supposed to galvanize young voters.”

Gilstrap agreed and said Democrats stand to gain from student loan relief before the midterm elections in November.

“If the Republicans took over, they might not advance the funding for next year. Because that’s something that has to be approved by Congress every year,” Gilstrap said.

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