Study: Biden’s Loan Pause Increased Borrowers’ Debt.

Student Loan Freezes Increase Borrowers’ Debt, Study Finds

A recent study from the University of Chicago reveals that student loan freezes implemented by both the Trump and Biden administrations have resulted in even more debt for borrowers. The study analyzed the loan pause first instituted by Donald Trump and then expanded by Joe Biden, and found that borrowers’ debt from private lenders increased when the government froze its loan payments. According to the study, “Borrowers used the new liquidity to increase borrowing on credit cards, mortgages, and auto loans.”

This study coincides with Biden’s recent agreement to end the loan freeze as part of his debt ceiling deal with House Speaker Kevin McCarthy. Biden signed the deal this month, which also prevents him from issuing any more extensions on the pause. The president had already extended the freeze eight times.

The fate of Biden’s possibly unconstitutional scheme to cancel $430 billion in student debt is up to the Supreme Court, which is expected to release its ruling soon. During questioning, justices were skeptical that the president had authority to enact the plan, as reported by the Washington Free Beacon.

Borrowers Likely to Spend Loan Bailout Funds on Non-Essentials

The University of Chicago study is in line with an October survey that found borrowers are “likely to spend their student loan bailout funds on ‘non-essentials, including vacations, smartphone[s], [and] drugs/alcohol,'” as reported by the College Fix.

Interest on federal student loans will restart on September 1, the Biden administration announced Monday, with payments due starting in October.

• Student loan freezes have resulted in more debt for borrowers
• Borrowers used the new liquidity to increase borrowing on credit cards, mortgages, and auto loans
• Biden agreed to end the loan freeze as part of his debt ceiling deal with House Speaker Kevin McCarthy
• The fate of Biden’s possibly unconstitutional scheme to cancel $430 billion in student debt is up to the Supreme Court
• Borrowers are likely to spend their student loan bailout funds on non-essentials
• Interest on federal student loans will restart on September 1

It’s important for borrowers to carefully consider their financial decisions and prioritize paying off their student loans to avoid accumulating more debt in the long run.