What’s the REAL Cost of Biden’s Student Loan Relief?
The president’s plan to wipe out the debt of tens of millions of students who had loans was estimated by the White House to cost $24 billion a year over ten years.
But that was a pipe dream. There is a recent report from the Congressional Budget Office that indicates Biden’s Administration’s estimate of $240 billion is nowhere near the actual cost that will be paid by taxpayers.
At the end of June, there were 43 million debtors who held $1.6 trillion in federal student loans. Biden’s plan allowed for those earning less than $125,000 per year to have $10,000 of their debt canceled and Pell grant recipients to see $20,000 of their debt paid down by taxpayers.
According to a report released this week by the nonpartisan Congressional Budget Office, these facts are likely:
- 95% of the 37 million borrowers who have direct loans from the federal government meet the income criteria for eligibility;
- 65% of income-eligible borrowers are Pell grant recipients, meaning that percentage stands to receive $20,000 in debt forgiveness; and
- 90% of income-eligible borrowers are likely to take advantage of the debt forgiveness plan.
The CBO noted that Biden’s action will cost $400 billion — not the White House’s predicted $240 billion. And that does not include the cost of the pause Biden placed on student loan repayments. This will increase the cost of outstanding student loans by $20 billion.
The student loan forgiveness plan is the most expensive executive order that Biden has made so far.
Maya MacGuineas, the president of the Committee for a Responsible Federal Budget, called the cost “outrageous,” suggesting it could exceed “$510 to $610 billion.
The former U.S. Secretary of Education Betsy Devos wrote: “However you add it all up, it’s an unprecedented amount of spending, all brought about by executive fiat. … This brazen and unconstitutional ‘forgiveness’ decree will be challenged and will lose in court.”
Devos claimed, “The move was meant to buy votes, not reform lending or solve a problem.”
Forcing 87% of Americans who don't have student loan debt to pay for $500 billion in debt (CFRB) held by mostly high-earners is a slap in the face.
— Rep. Scott Fitzgerald (@RepFitzgerald) September 27, 2022