While the Biden administration is reviewing possible student debt relief, Arkansas economists are discussing what the impact of student loan forgiveness would mean for the state.
The Democrats’ $50,000 student loan forgiveness plan would eliminate debt for 36 million borrowers in the country.
What would the proposal mean for Arkansans?
Dr. Michael Pakko says that the likely result would be higher taxes to offset the revenue that the federal government would no longer be receiving. However, reducing student debt would give students and graduates more money to spend elsewhere. Regardless, says Pakko, erasing student loan debt without addressing how student loan debt has gotten so tremendous will only put a Band-Aid over the problem, and could lead to the student loan issue getting worse.
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