As previously reported by The Drill Down team, President Biden has promised to forgive between $10K-20K of student loan debt for every American making less than $125,000. It has the potential to help 40 million Americans —but, according to the Committee for a Responsible Federal Budget, it could cost $400-600 billion dollars.
The White House originally claimed it would only cost roughly $240 billion over 10 years —but hold on to your hats, because here comes the Congressional Budget Office.
“CBO estimates that the cost of student loans will increase by about an additional $400 billion in present value as a result of the action canceling up to $10,000 of debt issued on or before June 30, 2022, for borrowers with income below specified limits and an additional $10,000 for such borrowers who also received at least one Pell grant,” the CBO said in a letter released Monday.
“The cost of outstanding student loans will increase by $20 billion because an action suspended payments, interest accrual, and involuntary collections from September 2022 to December 2022,” the CBO added.
“After accounting for those suspensions, CBO estimates that the cost of student loans will increase by an additional $400 billion in present value, as a result of the action canceling $10,000 of debt on or before June 30, 2022 for borrowers with income specified limits and an additional $10,000 for such borrowers who also received one Pell grant,” the CBO continues.
In other words —it’s going to be expensive.
“CBO’s $400 billion cost estimate shows this administration has lost all sense of fiscal responsibility,” House Education and Labor Committee Ranking Member Virginia Foxx (R-NC) said Monday. “Rather than working with Congress to bring down college costs, President Biden has opted to bury the American people under our unsustainable debt.”
But Democrats don’t see it that way at all —in fact, they see the CBO report as proof that Biden’s debt cancellation plan is helping Americans, full stop.
“Today’s CBO estimate makes clear that millions of middle-class Americans have more breathing room thanks to President Biden’s historic decision to cancel student debt,” Senators Chuck Schumer (D-NY) and Elizabeth Warren (D-MA) said. “President Biden delivered transformative middle-class relief by canceling student debt for working people who need it most — nearly 90% of relief dollars will go to those earning less than $75,000 a year.”
From Fox News:
The CBO analysis comes after the White House earlier this year said the student loan handout would cost roughly $240 billion over 10 years. It tracks with some independent estimates, including the Committee for a Responsible Federal Budget (CRFB), which estimated it would run taxpayers approximately $500 billion.
The CRFB also included in its estimate about $120 billion in costs to taxpayers from another element of the Biden’s executive order on “income-driven repayment,” which the CBO said it excluded.
Is anyone in the Biden Administration ready to tell the American people who’s actually paying for this giant handout? Because they may not like the answer.