The latest extension by the Biden administration of the student loan repayment pause until the end of next June will cost billions of dollars and make inflation worse, experts told the Daily Caller.
The student loan repayment pause, which was first implemented in March 2020 and is currently costing some $5 billion per month, could end up costing $275 billion if it is extended through the end of 2024, according to the Committee for a Responsible Federal Budget.
The committee said the pause extension could significantly increase inflation, which has the potential to cause the Federal Reserve to boost interest rates and add to recession pressures.
"Every time we extend this, it's going to worsen the inflation outlook," Committee for a Responsible Federal Budget Senior Vice President Marc Goldwein told the Daily Caller. "It's going to worsen our fiscal outlook. And it's going to further undermine the credibility of the higher education financing system."
He stressed that already late last year an extension "was unnecessary — at this point its downwardly damaging."
The extension comes after the Department of Justice requested the Supreme Court overturn a lower court's ruling, which stopped the student loan forgiveness plan from moving forward.
E.J. Antoni, research fellow for Regional Economics at the Center for Data Analysis at the Heritage Foundation, told the Daily Caller the newest extension will harm taxpayers even more.
"Despite repeatedly promising not to extend the moratorium, much like Lucy promising not to pull the football away from Charlie Brown, [President Joe] Biden has yet again broken his word and announced the eighth extension of the moratorium," Antoni said.
"This perpetual moratorium is an end run around the courts, which have ruled Biden's student loan bailout unconstitutional because no one has to make payments."
Secretary of Education Miguel Cardona responded to criticism in a press release that "callous efforts to block student debt relief in the courts have caused tremendous financial uncertainty for millions of borrowers who cannot set their family budgets or even plan for the holidays without a clear picture of their student debt obligations, and it's just plain wrong.
"I want borrowers to know that the Biden-Harris administration has their backs and we're as committed as ever to fighting to deliver essential student debt relief to tens of millions of Americans."
But Goldwein insisted if the Biden administration continues to extend the repayment pause, students might take more loans out because they believe they might never have to pay it back, which could create additional problems.
"The longer this goes, I think, the more people are gonna start to question whether they're ever going to pay back their debt," Goldwein said. "At some point, it's probably going to cause people, if it isn't already, to take out more debt than they otherwise would in hopes that at least they'll get some of the interest canceled."
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