Student loan borrowers bailed out by Biden are now racking up piles of other debt

Student loan borrowers who benefited from President Joe Biden's loan forgiveness are still straining their finances as their debt continues to pile up, according to a Saturday Wall Street Journal report and a July study .

Biden, who made student loan forgiveness a key promise in 2020, has moved forward with the initiative despite the U.S. Supreme Court ruling 6-3 in late June 2023 to tear down its plan for nearly 40 million Americans. However, the loan reliefinterviews with borrowers who have had their debt eliminated show that financial stress is still an important component of their daily lives as debt from other sources piles up, seconds in the WSJ.

A July study Constantine Yannelis, an associate professor of finance at the University of Chicago who studies household finances, found that borrowers have accumulated other forms of debt since their student loans were forgiven.

Yannelis' research shows that borrowers have seen increases in other types of debt: auto loans have increased by $230, credit card loans by $220, and home loans have also increased. Despite eliminating their student loans, these borrowers saw almost no change in their credit scores, which researchers believe may be due to loan forgiveness recipients taking out new loans to replace old ones , WSJ reported.

For example, Kimberly Acquaviva, a professor at the University of Virginia's School of Nursing, took out approximately $90,000 in student loans in the 1990s to complete her bachelor's, master's, and doctorate degrees. at the University of Pennsylvania. Although the debt relief wiped out her student loans, she and her husband are committed to spending the newly available funds to help their stepdaughter pay off her student loans and plan to help their son as well, according to the WSJ .

“It took some of the sandbags off my back. But it wasn't, 'Oh, yeah, now we can do something fun.' It was, 'Okay, now I'm not in as bad a situation as I could have been. state,'” Acquaviva told the network. “What has changed is not so much our quality of life, but our sense that we have some choice in how to use that $900 a month.”

The Biden administration has forgiven $1.2 billion in student debt for 35,000 public service workers in July. In addition, the administration provided $168.5 billion in relief to 4.76 million student loan borrowers in July. seconds in the Department of Education.

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