WVXU: UC economist discusses pros, cons of student debt relief
After the Supreme Court struck down Biden's student loan debt relief plan last summer, the administration turned to existing programs to provide loan forgiveness. Existing forgiveness programs, such as the Public Service Loan Forgiveness program, offer debt relief for government and nonprofit employees.
“Many of those loan programs weren't operating as they were intended to,” said Michael Jones, PhD, assistant professor of economics in UC's Carl H. Lindner College of Business. “In some cases, over 90% of applicants had applied, and they were denied the forgiveness for those programs.”
Individuals who receive debt forgiveness would have more disposable income to afford basic necessities, purchase homes or even start their own businesses. However, debt forgiveness could encourage future students to take on more debt or encourage some universities to charge more for tuition, Jones said.
Presently, many universities are working to become more affordable, Jones said.
“A lot of universities are actually competing to get students by increasing the scholarships,” he said. “And so as a result, the amount that students are paying out of pocket or taking on in terms of loan is not actually increasing at the rate of inflation.”
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