Biden's student loan forgiveness may lead to lower credit scores

As President Biden continues to prioritize student loan forgiveness, some experts are warning that this could have a negative impact on borrowers’ credit scores. According to a recent study by credit bureau TransUnion, if student loan forgiveness were to be implemented, borrowers with high balances would likely see an increase in their credit scores, while those with lower balances may experience a decrease. This is because borrowers who have paid off their loans in full or have lower balances may no longer show a history of responsible repayment. Additionally, lenders may view borrowers who have had their loans forgiven as higher risk, which could make it harder for them to access credit in the future.

It’s worth noting that no official policy regarding student loan forgiveness has been announced or implemented yet, and the impact on credit scores may vary based on the specifics of the policy. However, the discussion around student loan forgiveness highlights the interconnected nature of various financial systems and how changes in one area can have ripple effects throughout the economy. As the Biden administration continues to navigate the complex issue of student loan forgiveness, it will be important to consider the potential benefits and drawbacks for borrowers, lenders, and the broader financial stability of the country.