From Breakingviews - Resetting student loans brings Econ 101 lessons
. Each trades at about 25 times expected earnings, according to Refinitiv, but over the past 20 years the multiple on average has been closer to 18 times., which is valued at nearly 27 times forecast earnings, could easily slip back toward its typical 20 times.
The political setback for Biden does spare the country from other harmful effects. Student-debt forgiveness would have disproportionately benefited Americans with access to higher education. If the Supreme Court had supported the relief, it also risked just as it slides to a healthier level. For companies dependent on disposable income from younger consumers, however, there will be some basic economic lessons.The U.S. Supreme Court on June 30 ruled 6-3 against President Joe Biden’s plan to forgive student loan debt for some 43 million borrowers. The six justices appointed by Republican presidents backed the decision, while the three justices appointed by Democratic presidents dissented.
The forgiveness program was projected by the Congressional Budget Office to cost roughly $400 billion. Former U.S. President Donald Trump placed a moratorium on student loan payments and set interest rates on the loans to 0% on March 13, 2020, to cushion against the economic pain of the coronavirus pandemic. Interest accrual is expected to resume on Sept. 1, and payments are scheduled to start in October.Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
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