Biden’s student loan forgiveness program could cost $400 billion: CBO

The price tag for the federal student loan forgiveness program outlined by President Biden could cost as much as $400 billion, the Congressional Budget Office said Monday.

Republican lawmakers had requested the study to buttress their opposition to the plan because of the costs they predicted.

President Biden speaks about student loan debt forgiveness in the Roosevelt Room of the White House, Aug. 24, 2022, in Washington. (Evan Vucci/)

Underpinning the CBO assessment are assumptions such as the number of eligible borrowers who will apply and how much they all still owe. The White House had a smaller estimate, coming in at about $240 billion over the next decade, or $24 billion annually. The CBO’s first-year estimate is less than the administration’s, coming in at $21 billion, the White House noted.

Not factored in by the CBO are things that Biden said could offset that cost, such as the Inflation Reduction Act and other measures he took to reduce the federal deficit, which ballooned by almost $7.8 trillion during Donald Trump’s tenure, as reported by ProPublica and The Washington Post.

The plan Biden unveiled in August would forgive $10,000 of federal student debt for those who make less than $125,000 a year, or households making less than $250,000. Pell Grant recipients would have another $10,000 shaved off.

Borrowers owe on average $28,950, according to calculations by Forbes, with 92% of it federal student loans and the rest private student loans. Aggregate student loan debt totals $1.75 trillion, including federal and private. As student loan debt spills into middle age and beyond, Forbes noted, it extends into the retiree set, with 2.4 million borrowers aged 62 and up who still owe a total of $98 billion.

With News Wire Services