TOLEDO, Ohio — President Joe Biden announced on Wednesday plans to provide $10,000 in student debt cancellation for millions of Americans. Borrowers who earn less than $125,000 a year, or families earning less than $250,000, would be eligible.
A burning question for many is, when will borrowers see that relief? Bowling Green State University professor Joshua Boston said it won't be instant.
"It will involve a lot of rule making by the Department of Education," Boston, an assistant professor of political science, said. "They'll have to coordinate with those loan officers to see who qualifies for loan forgiveness, debt cancellation and other things."
Therefore, there is no exact date on when anyone will see debt forgiveness.
The U.S. has also been dealing with record inflation recently and many wonder where the money will come from.
Will debt forgiveness help or hurt the current economy?
Collin Gilstrap, an associate professor of finance at the University of Toledo, said borrowers will have more money without the debt, and what they decide to do with that money will make all the difference.
"If they save it, actually that's great," Gilstrap said. "It shouldn't create inflation. But, if they go out and decide to just spend it today, that's when we start to get more demands for goods and services which continue to push up inflation."
Boston said the elongated pause on payments has allowed some people to use the money they would spend to pay back student loans on things they need.
"I haven't been taking my loan payments and putting them into an account waiting to pay them back," Boston said. "I have been using the money in other ways for the last two years. It's not like, 'Oh, my loans are paused for another three, four months, and maybe part of my loans get canceled.' That doesn't change the way I'm spending my money right now."
Thus, it's too early to tell how loan forgiveness might, or might not, affect inflation.
Those questions Biden's motives behind the announcement may wonder, is this just a push to get voters to the polls?
"The timing of this was purposeful by the Biden administration," Boston said. "By President Biden, and everyone in the White House. Even the Chief of Staff, Ron Klain, has been quoted, this is supposed to galvanize young voters."
Gilstrap agreed and said Democrats stand to gain from the student loan relief going into midterm elections in November.
"If Republicans took over, they may not advance the funding for next year. Because this is something that has to be approved by congress every year," Gilstrap said.