United States the president Joe Biden announced last week that he would present a wide student loans a forgiveness program that will write off up to $10,000 for those who have taken federal student loans.

The amount goes up to 20,000 for those with Pell Grants, a scheme that helps potential students who demonstrate exceptional financial need.

However, the decision to forgive student loans could have bigger implications for the economy as a whole, with many citing that already high inflation could worsen in the coming days.

“There is a transfer of wealth from society at large to people who have borrowed to go to college right now.” Andrew Lautz The director of federal policy for the National Taxpayers Union told CNBC.

“This has implications for consumers. This has implications for taxpayers. This will increase the cost or impact on the overall policy budget.”

The National Taxpayers Union estimates that the average burden on a US taxpayer will be $2,503.22. However, that number could rise with an additional $10,000 made available to Pell Grant borrowers.

The plan does not solve the main problem

Critics of the plan also point out that the decision to forgive student loans does little to address the core problem of higher education, which is the cost of education.

“They don’t pay for it” Maya McGuineas – added the chairman of the Committee for a responsible federal budget.

“It’s just a change from one type of borrowing to another. Higher education is one of the most complex, thorny issues that really needs to figure out how universities and graduate schools are funded and what changes will make it more accessible. nothing like this.”

Can debt forgiveness be taxed?

Other meaning BidenThe recent decision may be the way states are considering student loan forgiveness.

In the coming weeks and months, states may issue guidelines on how paid off student loan debt can be treated for tax purposes.