59% of Americans worry student loan forgiveness will make inflation worse, CNBC survey finds

[Johnny2X2X]

23. Demand pressures

Last edited Tue Aug 23, 2022, 04:07 PM - Edit history (1)

I do not see how this increases short term demand very much at all. You're talking debt forgiveness of the last $10K of people's loans. Most borrowers won't change their payments at all and will just pay their loans off a year or 2 earlier at some point in the future. For those people with $10K or less in outstanding loans, yes, this eliminates their monthly student loan payments. There are 48 Million borrowers, about 1/3 owe $10K or less, so about 16 million people will have an extra $50 to a few hundred bucks in their pockets a month. That is a drop in the bucket for demand pressure. It's the equivalent of giving 5% of the country a tax credit that they can take monthly of a couple grand a year.

This isn't the same as handing 48 million people $10K each.

Edit. And payments have been paused for 2 years now and will be extended for another several months. So the payments are already stopped.