Biden’s Student Debt Cancellation Raises Inflation

[TheGunner]

"A key concern about the debt forgiveness program is its inflationary impact in an environment where inflation has been persistently elevated for over a year.

However, at the same time, this is also likely to be inflationary. Expectation of additional debt forgiveness programs evokes a moral hazard incentive for college students to take out more loans and for universities to increase tuition rates.1 To the extent that inflation is inherently persistent, any initial price level increase would also lead to sustained inflation over the near future. The Committee for a Responsible Federal Budget estimates that the Fed will need to raise rates by an additional 50 to 75 basis points to counteract the Biden debt cancellation proposal.

Student Debt Cancellation Raises the Price Level and Inflation

A key concern about the Biden administration's debt forgiveness program is its inflationary impact. This post provides a back-of-the-envelope calculation of this impact, based on a specific view of the federal budget and how it interacts with monetary and fiscal policies.

www.richmondfed.org

Everyone wants to know why inflation is “stickier” than expect, it’s because Biden keeps handing out free candy

 

[FiveWeight]

IMHO, one of the most damaging things a person can do is to waste years getting a degree in something that won’t help them or provide value to society, at somebody else’s expense. And the worst way to amplify this problem is to fund it.

Instead we should consider ensuring everybody has complete visibility into their job prospects at each department at every school. No assurance of repayment for bad decisions. Let Darwinism trim out the programs that don’t provide value, since nobody would want to go there if it’s not a financially viable path. If we did this, more folks will have a better job and life out of school, and there won’t be so much need for discussion about debt forgiveness.

 

[TheGunner]

IMHO, one of the most damaging things a person can do is to waste years getting a degree in something that won’t help them or provide value to society, at somebody else’s expense. And the worst way to amplify this problem is to fund it.

Instead we should consider ensuring everybody has complete visibility into their job prospects at each department at every school. No assurance of repayment for bad decisions. Let Darwinism trim out the programs that don’t provide value, since nobody would want to go there if it’s not a financially viable path. If we did this, more folks will have a better job and life out of school, and there won’t be so much need for discussion about debt forgiveness.

At some point, Biden will start to convince people to keeping “going to school” in perpetuity…as long as the government is funding student loans. Our entire population will have worthless Ph Ds