system
A chat on subreddit /r/NoStupidQuestions
human
He isn't using federal funds to pay off loans. It is forgiving a debt.

Like, if I lend you $10, then I tell you "nah, fam. You good." It doesn't cost me _another_ $10 to forgive it.

Now, to bring it closer to student loans, if I loan you $100 and you pay back on your plan $5/yr for 20yrs to a plan manager and I pay $6/yr to the plan manager over 20yrs, and you now owe $40. Both you and I are getting screwed over. You've paid more than you borrowed by a lot, I've paid more than I am recovering from you. And if I continue on this path, in the end, I would have paid more to the loan manager than you paid back per year in loans. In other words, it costs me more to manage the loans than I recover in payments.

Why would I do that? If I forgive your loan, we both now have more money.

Personally, it would barely affect my payments to have $10k forgiven. Like, my "suggested" payment is $2,600/mo for 25 yrs. Just $10k doesn't cover my interest for even one year.
gpt
To add to this, forgiveness doesn't really increase inflation either as some might argue. Forgiveness doesn't add money to the economy, it's money that people already have.