ABC15 – How Student Loan Forgiveness Impacts Arizonans
The Biden White House is forgiving $10,000 in student loans for those making under $125,000 a year and $20,000 for Pell grant recipients. The unprecedented move impacts a lot of Arizonans.
According to the most recent data from the US Department of Education, there are about 885,000 Arizonans with student loans managed directly by the federal government.
Most borrowers, about 300,000, are between the ages of 25 and 34.
The number of borrowers aged 35 to 49 is not far off however at about 290,000.
Currently, those 885,000 borrowers hold $31.6 billion in loans with 35 to 49 holding about $13 billion of that.
It’s unclear exactly how many Arizonans will benefit but taken together the average loan balance in the state is around $35,000.
Based on 2018 data from the Arizona Department of Revenue the number of borrowers that will see forgiveness is close to 90%.
Those critical of the move say that it will contribute to already high inflation.
Local economist Luis Cordova tells ABC 15 that non-payment of at least some student loans is already considered in the inflation equation. “There’s been a pause in student loan repayments since 2020,” Cordova said. “So a lot of this is already embedded in current inflation.”
Cordova did say that it could prolong inflation concerns, noting that while there are short-term benefits, in the long term it will likely lead to increased taxes to make up for the lost revenue.
Another large concern raised by critics is how President Biden has the authority for student loan forgiveness.
In an exclusive interview with ABC15, U.S. Secretary of Education Miguel Cardona said that President Biden is deriving authority from the Heroes Act passed by Congress in the months following the onset of the COVID-19 pandemic.
