According to recent projections from the Congressional Budget Office, the cost of the Biden administration’s plan to cancel a sizable chunk of federal student debt will be close to $400 billion. The director of the CBO, Phillip Swagel, predicted that the student loan plan announced by the Biden administration last month would cost about $400 billion but noted that the prediction was “highly uncertain” in a letter to Sen. Richard Burr (R-NC) and Rep.
Virginia Foxx (R-NC), the senior Republican on the Senate and House education committees. The CBO also calculated the cost to the government of the administration’s decision to continue the suspension of loan repayment through the end of the year at $20 billion.
The Biden administration announced last month that it would forgive $20,000 of student loan debt for each borrower who received a Pell Grant as part of their financial aid package and had an annual income under $125,000. The remaining borrowers in the same salary range qualify for a $10,000 loan forgiveness.
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The CBO did not consider the administration’s adjustments to the income-driven repayment scheme, which reduced borrowers’ required monthly payments based on their income. The estimations of how much borrowers would have paid back and how much they will pay back under the executive order to cancel debt are the most unclear parts of the equation, according to Swagel’s letter.
According to the CBO’s estimate, 65% of student loan debtors qualified for the complete $20,000 cancellation, while 95% qualified for partial forgiveness. The CBO predicted that 90% of trained staff would request loan forgiveness and that 45% of borrowers would have their entire balance erased.
Foxx criticized the Biden administration in a statement after the CBO’s estimate was released, claiming that the White House had “lost all sense of fiscal responsibility” and that the forecast was “just the tip of the iceberg” because it did not take into account “this administration’s other efforts to transfer wealth from college graduates to hardworking taxpayers who never set foot on a college campus.”
President Biden has chosen to bury the American people under our unmanageable debt, Foxx claimed, rather than working with Congress to lower college expenses.