A common argument I read from proponents of student debt cancellation is that cancelling student debt is essentially destroying money. Some amount was sitting in a ledger somewhere as an asset in a government agency and now poof, it’s gone. Essentially, it’s an accounting gimmick not impacting much of anything else apart from benefiting borrowers.
But this is opposite of what’s really happening. When the loan was made, money was sent to the school and the student promised to pay it back. Had the student went on to pay back the principal, no money would have been created. It would only have been money transferred through time. Take money from the future and use it today; basically an investment.
What happens when debt is cancelled is the money doesn’t have to be paid back. But the school still got paid. So cancelling debt is money creation.