President Joe Biden announced Friday that his administration would cancel $7.4 billion in student debt for 277,000 people, but the loan forgiveness has raised eyebrows of some who are worried about ballooning fiscal deficit and the rising debt burden.

What Happened: Right-wing publication ZeroHedge called out the move in a post on X, saying, "Buying Votes: Biden Cancels Student Debt For 277,000 Borrowers Ahead Of Presidential Elections."

In response, X platform owner Elon Musk, who has been fairly forthcoming with his views on issues facing the nation, went a step ahead and said, "Buying votes with OPM." OPM stands for "other people's money."

Why It's Important: The U.S. debt clock is ticking relentlessly as the country has raked up a debt of $34.65 trillion.

The national debt is the accumulation of government's borrowing along with associated interest it owes to the investors who purchased the securities it floated to raise finances.

Projections released by the Congressional Budget Office in February showed that the federal budget deficit will likely grow from $1.6 trillion in fiscal year 2024 to $2.6 trillion in 2034. As a percentage of the nation's GDP, the deficit is expected to rise from 5.6% in 2024 to 6.1% in 2026. Debt held by the public will likely increase from 99% of GDP in 2024 to 116% in 2034, the CBO said.

Following the Biden's administration's latest move, the Wharton School of the University of Pennsylvania released an analysis that showed that the new plan will cost $84 billion in addition to the $475 billion that is estimated for the SAVE plan, for a total cost of about $559 billion across both plans.

The SAVE plan, announced in August 2023, is an income-driven repayment plan that calculates payments based on a borrower's income and family size — not their loan balance — and forgives remaining balances after a certain number of years.

Pershing Square founder Bill Ackman also voiced his opposition to the latest student relief plan.

"Student loan forgiveness sounds great for borrowers overburdened with high interest rate debts they cannot repay," he said. "The problem is that the subsidy appears to go principally to more affluent families at the cost of burdening those who didn't attend college or whose parents saved to send their kids to school."

The hedge fund manager said he saw Biden's action as a populist measure to secure votes.

"It should be illegal for a president to buy votes by transferring funds from certain citizens to others he believes are more likely to support him in an election," he said.

Following the announcement, private student loan companies such as SoFi Technologies, Inc. (NASDAQ:SOFI) took a tumble.

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