Silver State Times

President Joe Biden's student loan forgiveness plan has drawn the ire of some economists who believe it will only contribute to inflation.

Several experts told Fox Business that Biden's plan is expected to cause increases in college tuition prices and increase inflation.

"Students will likely feel liberated to borrow more money on the assumption of future loan forgiveness, and universities will take advantage of the additional borrowing by raising tuition," said Brian Riedl, a senior fellow in budget, tax, and economic policy at the Manhattan Institute.

"This is pretty similar to the fact that historically 60% of all student aid increases have been captured with tuition hikes, and this will be treated like an increase in student aid moving forward, which suggests that 60% will be countered by tuition hikes,” Riedl said

During a White House press conference, Deputy Director of the National Economic Council, Bharat Ramamurti, was asked who would fund Biden’s loan relief program.

“What I would say is that, yes, this is paid for; it is paid for and far more by the amount of deficit reduction that we’re already on track for this year,” Ramamurti said.

A recent survey published by CNBC found that nearly three in five Americans are concerned that student debt cancellation will worsen inflation.

“Pouring roughly (a) half trillion dollars of gasoline on the inflationary fire that is already burning is reckless,” said Jason Furman, former chairman of the Council of Econimic Advisors during the Obama administration, in an Aug. 24 tweet.

As of Aug. 16, the Department of Education reports $32 billion in student loan relief has been approved by the Biden administration. Of this $32 billion, nearly $10 billion was approved through the Public Service Loan Forgiveness program.

The Committee for a Responsible Federal Budget recently published a report finding that $10,000 of student debt cancellation would nullify any deflationary benefits from the recently passed Inflation Reduction Act. The report also found student debt cancellation could add 15 basis points of inflation immediately, with additional increases in the future.

In August, Consumer Reports highlighted the latest Consumer Price Index numbers, showing 8.5% inflation in July. The Consumer Price Index measures the change in price for several common household goods and services, including food and energy. According to the article, 97% of Americans are worried about increased prices due to increasing inflation.

Nevada residents have already seen the costs of household goods go up 15.4% since the start of 2021, according to the state inflation tracker.