The Congressional Budget Office (CBO) calculated the Biden administration’s promise to forgive college loans will cost the U.S. federal government more than $400 billion over the following 30 years.
According to Biden’s proposal, which was unveiled in August, students who make less than $125,000 annually can receive up to $10,000 in bailouts.
Pell Grant beneficiaries who fulfill the same income requirements can receive $20,000 in debt relief. Early October is when the application for the benefit is anticipated.
Borrowers to Pay Less Interest
According to the CBO’s May 2022 baseline, “CBO predicted a substantial number of debtors in repayment plans with set lengths would collect and expend the interest on the central sums canceled by presidential decree.”
“These debtors will now spend little in both interest and principal than what was envisioned in the baseline as an impact of the executive determination.”
— Jeremiah Poff (@JJ_Poff) September 26, 2022
The price of unpaid student loans is expected to rise by $20 billion, according to the CBO.
This is due to Biden’s August continuation of the freeze on student loan interest and repayments, which he referred to as the last extension. Since March 2020, there has been a ban in place.
According to Swagel, after taking the freeze into consideration, the CBO anticipates the price of student loans will climb by nearly an extra $400 billion in current value, as a result of Biden’s college debt relief plan.
Swagel said Biden’s suggestions for a new income-driven repayment scheme, which the Committee for a Responsible Federal Budget projected will cost an additional $120 billion, “do not include any results” in the CBO’s $400 billion projected cost.
#EnoughlsEnough @SenWarren @SenSchumer You failed miserably at helping student loan lenders. You especially failed at helping teachers, nurses & public servants. I can’t watch you celebrating loan refinancer SoFi’s, cancellation plan. @POTUS should have listened to the NAACP.
— Alison (@Alison06044825) September 25, 2022
The Biden administration earlier predicted the plan would cost roughly $24 billion per year for the following ten years—or about $240 billion for the decade—while other projections put the overall price at $500 billion or higher for the ten-year period.
In order to lower the federal deficit, including the Inflation Reduction Act, Biden has downplayed the expense of his proposal to erase student loans.
GOP Rep. Virginia Foxx responded to Swagel’s letter by stating that Biden’s idea to cancel student loans is “illegal.”
Biden Has No Fiscal Discipline
CBO’s $400 billion cost estimate, according to Foxx, the ranking member of the Education and Labor Committee, “indicates this administration has lost all essence of fiscal discipline.”
According to her, Biden’s actions essentially shift the burden of paying for them onto non-college-going Americans. It is only the tip of the iceberg, according to her remarks.
“It does not incorporate the payment of this administration’s other endeavors to redistribute revenue from college graduates to people who work hard and are taxpayers who have never set foot on a college campus.”
This includes Biden’s “re-writing and growth of the Public Service Loan Forgiveness and Income-Driven Repayment initiatives,” a critic of the administration said.This article appeared in Conservative Cardinal and has been published here with permission.