The White House released on Friday its cost estimate for the student loan forgiveness plan President Biden put forth last week.
As reported in USA Today, the White House believes that the plan will cost $240 billion over the next 10 years.
The White House said Friday that President Joe Biden's action to cancel student loan debt for millions of borrowers will cost the federal government $240 billion over the next decade after refusing to give a cost estimate earlier in the week.
This is an extrapolation of an earlier number given by White House Press Secretary Karine Jean Pierre. She told CNN's Don Lemon the following on Thursday:
President Joe Biden's student loan forgiveness plan could cost about $24 billion per year … Assuming that 75% of folks who take this on, the President's student loan cancellation plan, and you look at the average monetary cash flow on that, it's going to be about $24 billion per year,” she said on “Don Lemon Tonight.”
A White House estimate was not available on Wednesday when Biden announced the proposal.
The nonpartisan Committee for a Responsible Federal Budget released a much more significant number on Wednesday of last week. They have put forth a middle estimate of $500 billion, with a range of $440 to $600 billion. The Committee's estimate analyzes a number of factors, including the extension of the loan repayment pause through the end of the calendar year, the new income-driven repayment plan and finally the broad debt forgiveness of either $10,000 or $20,000 per eligible borrower and/or household.
The Committee for a Responsible Federal Budget projected that “the overall amount of outstanding federal student loan debt will return to $1.6 trillion (its current level) within five years.”
The centrist Tax Foundation has stated that Biden's student loan forgiveness plan would “make inflation worse by increasing the deficit by more than $350 billion, fully offsetting all of the deficit reduction resulting from the Inflation Reduction Act.”
Tax Foundation researchers Arnav Gurudatt, Garrett Watson and William McBride also wrote the following about the plan:
The President's debt forgiveness plan is certainly beneficial to some, but it would add to the national debt and worsen inflation. In addition, it sets a new precedent and expectation for further debt forgiveness, which would further increase the national debt and inflation. It may also push tuition prices higher, as more students treat loans essentially as grants.
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It won’t cost anything because he didn’t have the power to do that and the courts will strike it down.
I strongly feel the student loan forgiveness is a very bad idea. When a person has to earn his education by working his way through school he would really appreciate what he/she accomplished and would no doubt succeed in the world. If a college degree is simply given to one I’d be willing to bet that person ends up being a ditch digger or a cocktail waitress. And speaking for myself I went to the school of hard knocks and spent 41 years at a profession that was both physically and mentally demanding. So why should I pay for some jerk to spend four years in college going from party to party?