The Biden administration’s latest plan to wipe out federal student loan debt for millions of borrowers could add up to $750 billion to the national deficit, according to a report Tuesday. Committee for a Responsible Federal Budget.
So far, the White House has announced $150 billion in so-called student loan “forgiveness” programs over the last year, following the Supreme Court’s June ruling. Refusal to unilaterally cancel a loan. The previously rejected program would have wiped out $430 billion in borrower debt.
Since then, the Biden administration has ignored the court ruling and enacted a number of laws. Similar but smaller program Eliminate federal student loan debt. Many of the cancellation announcements were rolled out through the White House’s newest income-driven repayment program, Savings for Valuable Education Plans, which sets monthly payments based on a borrower’s income. According to the government, about 8 million Americans are currently enrolled in SAVE. More than half of subscribers pay $0 per month, while over 1 million others pay less than $100 per month.
of education data initiative reported $1.602 trillion in outstanding federal student loan debt with 43.2 million borrowers. The report noted that federal loans account for 92.8% of all student loan debt.
The CRFB report states, “According to the Department of Education, the planning elements of today’s proposed rule would cost nearly $150 billion. It does not include a proposal that would allow the Secretary of Education to cancel the debts of people who may be eligible to do so.” It is estimated that including this provision could cost the plan between $250 billion and $750 billion, depending on how additional cancellations are designed. ”
The Biden administration’s new plan would eliminate accumulated interest for student loan borrowers whose balance exceeds their original loan amount. The CRFB estimates that taxpayers would need to spend $73 billion to cover these costs.
Borrowers on standard payments who qualify for cancellation but do not apply for the government program will also have their debts automatically canceled. The nonprofit said the total would be an additional $9 billion.
Additionally, under the administration’s plan, loans that have been repaid over 20 to 25 years would be zeroed out, costing taxpayers $14 billion.
Borrowers who took out a loan to participate in a “low monetary value program” would have an outstanding account balance of zero. The CRFB estimates the cost to be $35 billion.
The administration will cancel Federal Family Education Loan debt, which will cost an additional $17 billion.
Individuals who are “facing hardship” or who are likely to default on their debts will also be discharged from their debts. The CRFB estimated this could cost between $100 billion and $600 billion.
“The Department of Education estimates that the first four elements of the plan will cost $147 billion over 10 years, with half of the cost attributable to the cancellation of accumulated interest,” the report states. There is.
The CRFB called the suspension for hardship “the most opaque and potentially costliest part of the administration’s proposal to date,” adding that it “could be far-reaching and persistent.” “There is,” he pointed out.
The Biden administration has not clearly defined what constitutes a qualifying hardship, but it has mentioned more. Dozens of possible criteriahousehold income, assets, total debt, current repayment status, age, disability, medical expenses, etc.
“Our estimate of the total cost of the plan, between $250 billion and $750 billion, would match the cost of the administration’s $400 billion mass debt cancellation, which was ruled illegal by the Supreme Court, plus more. “This would exceed the $600 billion in debt cancellation already enacted through unilateral executive action,” the report said.
The CRFB warned that significant debt cancellation would “support demand growth and put upward pressure on inflation and interest rates.”
Eighteen states have filed two separate lawsuits against the Biden administration over the SAVE plan.
Do you like Blaze News? Avoid censorship and sign up for our newsletter to get articles like this delivered straight to your inbox. Please register here!
