BAKERSFIELD, Calif. (KGET) — Kern County residents shared mixed reaction to President Biden’s newly announced plans to relieve up to $10,000 of student debt for most borrowers. Borrowers say this program will change their financial futures, but economists warn student loan forgiveness could be a double-edged sword.
Local students say debt relief can’t come soon enough.
“Honestly it’s a big burden off the shoulders,” said Terrin Dickey, a student at Bakersfield College.
“I’m excited,” said Audrey Hill, another Bakersfield College student. “It’s less stress for me, and less stress for my family trying to figure out how to get that money.”
This comes as inflation puts pressure on students’ bank accounts.
“Some people don’t pay off their student loans till they’re 50,” said Hill. “All that money could be going to other things.”
But not everyone agrees. Bakersfield resident Carrie Gallup says her daughter paid her own way through school.
“She went to college and she took care of it all, all on her own. Herself,” said Gallup. “I’m quite proud of her for doing it. She didn’t ask for a handout.”
Local experts say loan forgiveness is positive for individuals, but could be risky for Kern’s economy.
“There are also larger consequences to something like this on a community, say, inflation,” said Dave Anderson, Financial Advisor with Moneywise Wealth Management. “If you were to take debt off of someone’s personal balance sheet, they now have the ability to go out and buy more stuff. It increases demand, therefore increasing price.”
Anderson has advice for anyone looking forward to lower student loans.
“That gives you the opportunity to redirect some dollars that were going towards debt,” said Anderson. “Now you can direct those towards retirement savings, emergency savings, or saving for college for your kids. Focus on understanding it, and redirect those dollars somewhere else.”
The U.S. Dept. of Education says you can apply for loan relief in a few weeks.