Economist says effect of president’s student loan repayment plan is ‘muddy’

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CORPUS CHRISTI — “Nothing has been handed out like a stimulus check where people actually get money,” said Harmeet Singh, an economics professor at Texas A&M Kingsville. “That’s going to have a ripple effect for years to come.”

KRIS 6 asked Singh how President Joe Biden’s student loan forgiveness plan will affect both borrowers and non-borrowers.

On August 24, Biden announced details of the plan, including up to $10,000 in student debt that will be forgiven for people who did not receive the Pell grant. And for those who did, they’re considering up to $20,000 in forgiveness.

“It’s very muddy,” Singh said.

Many people claimed that the money saved from paying off their loans could still help reduce inflation.

“It helps, but from a general economic perspective it would actually increase inflation if people tried to spend more money,” he said.

Biden’s plan does not specify where the money the government is losing will be absorbed.

“The federal government runs on taxpayers’ money, so in the long run people might see their taxes go up,” Singh added.

It could add to the federal debt that has been growing over the past two decades.

Singh said it was too early to tell the effect on the country as loan repayments will not resume until January 2023.

“There can be a lot of different things that can happen in the economy and people’s personal world, with the stock market,” he said.

Even so, some people said the plan was unfair.

“I worked hard,” Singh said. “I could have delayed. I could have paid the minimum and waited and seen some cleared.

He understood the thought process but said, reviewing the history of student debt, the numbers are high.

“People who went to college for a four-year degree 30 years ago didn’t have to pay as much or borrow as many dollars as someone who goes to college now,” he said. -he declares.

KRIS 6 broke down the average cost of tuition and fees at two local universities and one college for resident students taking 15 hours per semester.

According to campus websites and Texas Council on Higher Education, in 2002, Texas A&M Kingsville students paid $3,365 in tuition and fees per semester, up from $9,892 in 2022.

Texas A&M Corpus Christi students paid $3,568 in 2002, down from $9,754 in 2022.

Del Mar College students paid $1,138 compared to $2,240 in 2022.

Singh said that at the time, public universities received more funding from the state, but now they pass those costs on to students.

“You have all these online tools, technology and student services, all the programs when I was going to school were pretty much non-existent,” he said.

He added that no matter which side of the debate someone is on, the politics are unprecedented.

It is important for prospective students to assess their options and plan accordingly.

“Where they go to college and what they study,” Singh said. “Try to research the profession you might have with a certain college degree.”

Because some people’s salaries might not contribute much to the debt they owe.

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