Canceling Biden’s student loan could cost $379 billion over 30 years
Protester Gan Golan from Los Angeles at Occupy DC activities in Washington, DC
President Joe Biden’s order to forgive millions of Americans in student loan debt could cost an average of $30 billion a year over the next decade, according to Biden administration estimates.
The cost over 10 years will be around $305 billion, measured by reduced cash flow to government, according to the Department of Education. Over 30 years, that would be about $379 billion in today’s dollars.
The Congressional Budget Office estimated that the plan costs about 400 billion dollars over 30 years. In addition, the cost of outstanding loans is expected to increase by about $20 billion this year.
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Biden announced the sweeping federal student debt cancellation plan in August. This includes $10,000 per borrower, or up to $20,000 for those with Pell Grant loans, which are generally loaned to undergraduate students who demonstrate financial need.
Individuals with an income of less than $125,000 or married couples with a joint income of $250,000 are eligible for debt relief.
The plan will also allow borrowers to cap undergraduate loan repayments at 5% of their monthly income, among other changes aimed at providing relief to the estimated 40 million people who would benefit.
The student debt relief plan comes as payments on federal student loans, which were paused during the pandemic, are expected to resume in January.
“Nearly 90% of relief dollars will go to those earning less than $75,000 a year,” the Department of Education said. said. “And no borrower or household in the top 5% will benefit from this action.”
However, research of the Committee for a Responsible Federal Budget published this week argued that 57% to 65% of the student loan debt forgiveness and repayment break will benefit those in the upper half of the income spectrum.
“Ultimately, the administration’s student debt cancellation proposal is costly, inflationary, will drive up the costs of higher education, and deliver the majority of the benefits to those in the top half of the education system. ‘income range,’ writes the non-partisan organization.
The plan has drawn criticism from Republicans and has been the subject of several legal challenges.
However, White House press secretary Karine Jean-Pierre said this week that “it’s too bad” Republicans are trying to block relief and reaffirmed Biden’s commitment to see the plan through. .
“The president will continue to work for the American people, trying to find ways to give them some breathing room,” Jean-Pierre said. during a press briefing tuesday.