Could student loan forgiveness impact inflation?

(WSET) — The Biden Administration could cancel federal student loan debt up to $10,000 for those who earn less than $125,000 and some question whether canceling that much student loan debt could make inflation worse.

Dr. Nancy Hubbard, the Dean of the School of Business at the University of Lynchburg weighed in on whether this could impact inflation.

Hubbard said it's not entirely clear what impact the move would have on inflation.

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She said assuming people make monthly payments on their loans, they would now have extra money to spend, so it could fuel inflation.

"Simply because of the numbers because we're looking at millions of people where this could have an impact," Hubbard said.

On the other hand though, she said it doesn't seem like it will have a huge impact.

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"People aren't going to go out and start buying cars because they're saving $100 a month, or buying houses. If it was forgive all student debt, maybe you would," Hubbard said.

Hubbard adds another impact this could have is that wiping out these payments isn't going to help our deficit.

She said it's seen by many as negating what the Inflation Reduction Act is doing in helping balance the budget and reduce the deficit.