- Treasury Secretary Janet Yellen said student-loan relief “could be good for the economy.”
- She added there are “trade-offs” that should be analyzed, but she’ll support what Biden decides.
- Biden recently said a decision on student-loan forgiveness will be made in the coming weeks.
Broad student-loan forgiveness remains controversial, but President Joe Biden’s Treasury Secretary suggested the relief might not be a bad thing.
“They could be good for the economy,” Janet Yellen told Georgia Sen. Raphael Warnock during a Senate hearing on Tuesday, in response to a question on the potential benefits of student-loan relief. “There are some trade-offs involved that need to be analyzed.”
Yellen also said she agrees with Warnock that student debt is “a substantial burden,” and the Treasury “will support anything that President Biden decides as a part of his policy, and he’s in the process of thinking through how he wishes to approach student debt.” .”
The trade-offs Yellen mentioned could be in reference to who would benefit from the relief. Biden said during a speech last month that a decision on student-loan forgiveness would be made in the coming weeks, and he added that he is not considering $50,000 in relief, suggesting whatever he implements will be closer to his $10,000 forgiveness campaign pledge. And Press Secretary Jen Psaki also recently confirmed to reporters that the relief will be targeted to borrowers making under $125,000, as Biden had suggested on the campaign trail.
Since he took office, Biden expressed concerns with student-debt cancellation benefitting wealthy students from Ivy League schools, even as progressive lawmakers and experts have pushed back on the notion student-loan relief will benefit the wealthy. Massachusetts Sen. Elizabeth Warren, for example, argued for the progressive nature of debt cancellation during a Senate hearing last week.
“It’s clear that the opponents of student loan cancellation are living in a bubble of privilege that is completely disconnected from the reality of the people who borrow money to get an education,” Warren said. “99.7% of borrowers did not get an Ivy League degree. Heck, 40% of them didn’t get any degree at all. The majority of these loans are held by people with zero wealth. And Black borrowers are not just treading water trying to keep up with their payments – they’re actually falling behind.”
When it comes to the economic consequences of student-debt relief, both Republicans and Democrats have been vocal. Rep. Virginia Foxx, the top Republican on the House education committee, has consistently said that canceling student debt will exacerbate inflation and cost taxpayers, with some of her colleagues arguing that Biden is only considering loan relief to win votes for Democrats in the midterm elections .
But advocates for loan forgiveness have said debt relief will stimulate the economy, allowing borrowers to put money they would have spent on their debt into other purchases. Biden has yet to comment on the amount of relief federal borrowers will receive, but recent data provided by Warren’s office found that if he does stick with $10,000, it would zero out balances for a third of borrowers.