WASHINGTON — President Joe Biden’s plan to forgive $10,000 in federal student debt to most borrowers will cost the government about $400 billion, the unbiased Congressional Budget Office said in an estimate released Monday.
The CBO’s review of the administration’s policies said the price tag is “a result of the action canceling up to $10,000 in debt issued on or before June 30, 2022.”
The president’s plan will cover borrowers with income below specified limits and forgive an additional $10,000 for those who have also received at least one Pell Grant, said CBO Director Phillip Swagel.
“Reduced cash inflows into the Treasury will increase the amounts the federal government borrows over time,” he said Monday.
At the end of June, 43 million borrowers had $1.6 trillion in federal student loans and about $430 billion of that debt will be forgiven, the CBO estimates.
In a joint statement, Senate Leader Chuck Schumer, DN.Y., and Senator Elizabeth Warren, D-Mass., argued that the CBO’s estimate made clear that middle-class Americans will have “more breathing room.”
Unlike President Trump and the Republicans who gave giant corporations $2 trillion in tax breaks, President Biden provided transformative relief for the middle class by canceling student debt for working people who need it most — nearly 90% of aid dollars go to to those who earn less than $75,000 a year,” they said.
“We disagree with all of CBO’s assumptions underlying this analysis, but it is clear that the pandemic payment pause and student debt forgiveness are policies that show how government can and should invest in working people, not in the rich and billionaire companies,” the two Democrats added.
However, the Committee on a Responsible Federal Budget, a group that advocates lower deficits, said the CBO’s forecasts confirm “the excessive cost” of Biden’s student loan plan.
“As the CBO’s estimates help confirm, the president’s student debt plan would double the 10-year savings of the Inflation Reduction Act, exacerbate inflationary pressures, and benefit millions of Americans with higher degrees in higher-income households,” said its chairman, Maya MacGuineas. “This is arguably the most expensive executive action in history. It is unacceptable that the president would carry it out without compensation and without Congressional approval.”
The government’s plan, which also calls for an extension of the payment pause until the end of the year at an estimated cost of $20 billion, has drawn equally sharp criticism from Republicans who claim it will increase inflation.
GOP lawmakers highlighted the additional cost to taxpayers just weeks after the midterm elections amid historically high inflation.
“The Biden administration’s student debt bailout is even more expensive than we initially thought,” tweeted Rep. Andy Biggs, R-Ariz. “The current bailout will cost Americans $420 BILLION, according to the CBO. This is probably the most expensive executive action in American history.”
Representative Mariannette Miller-Meeks, R-Iowa, tweeted, “President Biden doesn’t forgive student loans — he charges hard-working Americans $400 billion.”