WASHINGTON — President Joe Biden’s plan to forgive $10,000 in federal student debt for most borrowers will cost the government about $400 billion over 10 years, the nonpartisan Congressional Budget Office said in an estimate released Monday.
The CBO’s evaluation of the administration’s policy said the $400 billion price tag is “a result of the action canceling up to $10,000 of debt issued on or before June 30, 2022.” The president’s plan covers borrowers with income below specified limits and an additional $10,000 forgiven for those who also received at least one Pell grant, CBO Director Phillip Swagel said.
The report also noted that the administration plan to extend a pause on federal student loans will also cost about $20 billion.
As of the end of June, 43 million borrowers held $1.6 trillion in federal student loans and about $430 billion of that debt will be canceled, the CBO estimated.
The Committee for a Responsible Federal Budget, a group that advocates for lower deficits, said the CBO’s predictions confirm “the outrageous cost” of Biden’s student loan plan.
“As CBO’s estimates help confirm, the President’s student debt plan would wipe out the ten-year savings from the Inflation Reduction Act twice over, worsen inflationary pressures, and deliver benefits to millions of Americans with advanced degrees in upper-income households,” said its president, Maya MacGuineas. “This might be the most costly executive action in history. It’s unacceptable that the President would implement it without offsets and without Congressional approval.”
Republicans quickly seized on the report, highlighting the added cost to taxpayers just a few weeks out from the midterm elections and 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 likely the most expensive executive action in American history.”
Rep. Mariannette Miller-Meeks, R-Iowa, tweeted, “President Biden isn’t forgiving student loans—he’s charging hardworking Americans $400 billion.”
