U.S. News
CBO: Biden’s student loan forgiveness plan will cost $400B
WHAT YOU NEED TO KNOW:
- President Joe Biden’s student loan relief plan will cost about $400 billion over 30 years, the Congressional Budget Office estimates.
- In August, the president announced a plan to forgive $10,000 in federal student loans for borrowers who earn less than $125,000 a year.
- The White House insists that the student loan forgiveness plan cost pales in comparison to Biden’s ability to foster debt reduction elsewhere.
President Joe Biden’s student loan forgiveness plan will cost about $400 billion over 30 years, the Congressional Budget Office (CBO) estimates.
Last month, the president announced the plan to forgive $10,000 in federal student loans for borrowers with annual earnings of less than $125,000 per year, or have a household income of less than $250,000 if filing jointly. Also, low-income Pell Grant borrowers are eligible for an additional $10,000 cut.
The CBO estimated the cost of Biden’s pause on student loan payments from September through December of this year will total $20 billion, in addition to the costs to forgive that debt.
The CBO is a nonpartisan federal agency that provides budget and economic information to Congress. The office calculates the costs of federal revenue and spending plans for Congress. Its estimate does not include the cost of adjustments to income-driven repayment plans.
Biden’s executive order lowered the cap a borrower would have to pay on their student loans from 10% of their income, down to 5%. The Committee for a Responsible Federal Budget, a non-profit public policy organization that opposes Biden’s student loan forgiveness plan, has estimated the change will cost an additional $120 billion.
Over 40 million Americans may be affected by the student loan changes, according to the White House, and half of those could see their entire student debt eliminated.
Application for loan forgiveness will be available in early October. During a White House briefing on Monday, Press secretary Karine Jean-Pierre said the government would have updates on the application process “very soon.”
The White House said that about 8 million borrowers will receive forgiveness automatically because the Department of Education already has their income information.
The cost of the student loan forgiveness plan pales in comparison to the president’s ability to foster debt reduction elsewhere, The White House added.
Source: USA Today
Colby Goodson
September 28, 2022 at 6:38 am
Wonder if I send a receipt for when I paid off my student loan back in 1998, they will send me a check?
Sanjosemike
September 28, 2022 at 9:59 am
Colby, like millions of other responsible Americans, we too paid off our college loans, in 1973. It wasn’t easy. Getting started was painfully difficult.
Don’t you dare feel sorry for me. I retired at age 53. But when you and I signed on the dotted line, our signature meant something. A lot.
Sanjosemike (no longer in CA)
REVR
September 28, 2022 at 9:55 am
Yeah, my parent loan will be paid off in December … I wonder if they’ll pay me $22,110 (the amount I’ve faithfully paid for the last 33 months)
Oscar S. Ramirez
September 28, 2022 at 1:32 pm
I worked as did my wife so I could earn a BA Degree, an MA Degree and a PhD Degree. I never received any affirmative type subsidy from the government. I never considered on freeloading at the expense of the taxpayers. In time, I provided seven years free service to the poor. I provided the free service because I felt it is important to return something to the community. Question: How is Biden going to reconpense me for the money I spent in attaining my training?
Michele
September 28, 2022 at 1:57 pm
How much money has the federal government earned over the years in interest charged on outstanding loans?
Lily
September 28, 2022 at 7:21 pm
I never received close to a six figure income and worked days and went to school evenings to get my BSN. I never took any loans to do it. My nieces and nephews also paid off any loans they did take for their educations. It’s a matter of setting priorities which some young people don’t believe is necessary. They want immediate gratification and feel entitled! Unfortunately our current Administration wants Votes from these young adults and doesn’t think anything of bribing them. May God Bless America.
Sean Rickman
September 28, 2022 at 8:27 pm
Of coarse the results of sloppy joeys price of buying votes is ridiculous,its what democRATS do,spend and tax and then tax and spend more.But their biggest problem,really our problem is to screw AMERICAN PATRIOTS,like the January 6th kangaroo court,something that they are very good at.