Local economist weighs in on student loan debt cancellation

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While tens of millions will see some relief from their student loans, about 9 million Americans will see their balances wiped entirely after the Biden Administration announced new paths to student loan forgiveness.

Some economists and researchers say it’s a good solution for the short term but more needs to be done in the long run.

“I think the focus should be how do we improve college financing for the long term,” said Dr. Amir Neto, the Director of the Regional Economic Research Institute at FGCU.

As President Biden plans to wipe out as much as $20,000 per borrower from student loans, many are caught in the debate about what happens next.

“That’s the same as saying now for one year you don’t have to pay your car payment,” said Southwest Florida resident Ralf Kotitschke.

“I think it’s actually really well needed,” said Augustin Diaz. “Not only is tuition really expensive these days but tuition keeps going up.”

Dr. Neto said we likely won’t feel the loan forgiveness by inflation rising more.

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“So it’s not like they have extra discretionary income to just go spend so on that perspective inflation should not be much affected by this loan forgiveness,” said Dr. Neto.

He also explained that the move could cause more college students to rethink how they borrow, looking to the government for student loans that could be forgiven later, rather than private lenders.

“So there is a cost of doing business right that still has to be maintained,” he said.

That could mean fewer private lenders later on, with higher interest rates.

Tags: FGCUPresident Bidenstudent loansStudent loans cancelled

 

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