UK professor speaks about the impact of Supreme Court student debt relief decision

We spoke with an economic expert on the impact of both relieving and not relieving student loans.
Published: Jul. 6, 2023 at 4:48 PM EDT
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LEXINGTON, Ky. (WKYT) - The Supreme Court ruled against President Biden’s plan to wipe out student loan debt for millions of Americans last week.

We spoke with an economic expert on the impact of both relieving and not relieving student loans.

“It’s awful easy to boil these issues down to kind of simple talking points, but they are complex,” said Dr. Michael Clark, the director of the Center for Business and Economic Research at the University of Kentucky.

Dr. Clark says determining the impact of student loan forgiveness is not a simple equation.

“As politicians, whether that be Biden or, or anyone else in elected office, are considering different types of policies, it’s really useful for them to think about the idea of ‘this is going to cost something, what is it going to change? What type of benefits are we going to get as a result of that? And how do they compare?’” said Dr. Clark.

One concern with student loan forgiveness is incentivizing unhealthy personal economic choices.

“If they think at some point in the future the government may do a student loan forgiveness program, they may look at this and say ‘okay, well I can take on this debt, and there’s a good chance I don’t have to pay this because, you know, the government might forgive this at some point and time,” said Dr. Clark.

Another common question is the impact of the forgiveness plan on the country’s already rising inflation, which Dr. Clark disputes.

“It’s very likely these are relatively small changes in terms of inflationary pressures regardless of what direction you’re looking at,” said Dr. Clark.

And that relieving the debt is not a significant cost in the scope of U.S. economic spending.

“There’s a lot of student loan debt out there. The amount that would be paid, you know, each month in terms of servicing that debt would be relatively small in terms of the grand size of the economy,” said Dr. Clark.

Despite being struck down in court, President Biden has announced he still plans on providing some relief to borrowers, including easing borrowers into payments with less penalties for missed payments through September 30 of next year.