(TheProudRepublic.com) – The liberal talking point turned out to be a total fiasco, as student loan borrowers who received forgiveness under Joe Biden’s plan are still facing financial stress as their debt continues to grow.
This is according to a report from the Wall Street Journal (WJ) and a July study.
Biden, who promised student loan forgiveness during his 2020 campaign, has continued with the initiative despite the U.S. Supreme Court ruling 6-3 in late June 2023 to block his plan, which was intended to help nearly 40 million Americans.
Even with the relief, the WSJ reported that interviews with borrowers show that financial strain remains significant because other forms of debt are increasing.
A July study by Constantine Yannelis, an associate professor of finance at the University of Chicago, found that borrowers have taken on more debt since their student loans were forgiven.
Yannelis’ research shows an increase in other types of debt as auto loans rose by $230, credit card borrowing by $220, and home loans have also gone up.
According to the WSJ, even with student loans forgiven, borrowers’ credit scores have barely changed, possibly because they are taking out new loans to replace the old ones.
For instance, Kimberly Acquaviva, a professor at the University of Virginia School of Nursing, had about $90,000 in student loans during the ’90s for her degrees at the University of Pennsylvania.
Although her student loan debt was forgiven, she and her husband have used the freed-up funds to help pay off her stepdaughter’s student loans and are planning to assist their son as well.
“It took some of the sandbags off of my back. But it was not, ‘Oh yay, now we can do a fun thing.’ It was, ‘OK, now I’m not in as bad a situation as I could have been,’” Acquaviva told the outlet.
She added, “What has changed isn’t so much our quality of life but our sense that we have some choice of how to use that $900 a month.”
Additionally, the Department of Education reported that as of July, the Biden administration had forgiven $1.2 billion in student debt for 35,000 public service workers and provided $168.5 billion in relief to 4.76 million student loan borrowers.
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