Former US Education Sec Warns of ‘Inflationary Effect’ of Biden’s Student Loan Forgiveness Scheme

Earlier this week, the Washington-based non-profit organization Committee for a Responsible Federal Budget estimated that Biden's student loan handout plan would cost US taxpayers between $440 billion and $600 billion over the next ten years.

Former US Secretary of Education William Bennett has slammed President Joe Biden’s plan to address student loan debt, which was unveiled on Wednesday, as a “terrible” and “idiotic" idea.

Speaking to Fox News, he suggested that “the only reason we can think that a person would advance this would be for political purposes.”

In an apparent nod to Democrats and the upcoming US presidential election, Bennett argued that “they're hoping that the people who get this [loan handout] will vote for Biden. That's the only conclusion you can draw.”

Bennett also warned of “the inflationary effect” of the student loan forgiveness scheme, stressing that “almost everyone, including former Obama administration officials, indicate that this will add a lot of fuel to the fire in terms of inflation.”

“So that money that was just forgiven will go into the economy and heat things up — and prices will go up. Prices will go up for everyone,” he asserted.

The former education secretary also claimed that those who will be hurt the most by this will be “the people who have the least — and who will not have the benefits of the student forgiveness plan.”

“A couple categories here. One, all the people who didn't go to college or graduate from college. And second — and this point has been kind of neglected — are minorities,” he argued.

Bennett went on to say that “as soon as you forgive these loans for higher ed, the colleges and universities will raise their tuition and fees. And they will.”

“We just keep chasing our tail. Keep increasing the grants, the loans — and they will keep increasing the charges. As soon as the money's there, they will find a way to charge you for it,” the former education secretary pointed out.

The remarks follow Biden announcing on Wednesday that the government will forgive $10,000 in student loan debt per borrower and up to $20,000 for those that received Pell Grants. Under the blueprint, the loan forgiveness is limited to those making less than $125,000 a year for individuals or $250,000 a year for households.

According to the White House, this action could wipe out debt entirely for nearly 20 million of the 43 million Americans who currently hold student loan debt.

Critics were quick to suggest that the plan will further add to the already record-high levels of inflation in the US.

Senate Minority Leader Mitch McConnell slammed the program as “yet another way to make inflation even worse, reward far-left activists, and achieve nothing for millions of working American families who can barely tread water.”

Late last month, Forbes referred to reports claiming that the US Department of Education had significantly underestimated the cost of the federal student loan program, arguing that the department will most likely lose $197 billion on student loans issued over the past 25 years, something that apparently prompts a question mark on how the Biden administration will tackle fiscal issues pertaining to its current student loan forgiveness scheme.