According to a new study released on Monday by the Congressional Budget Office, The Biden Administration’s proposal to forgive outstanding student debt for tens of millions of Americans will cost the federal government around $400 billion.
This number is based on an analysis of the reduction in revenue and the estimated cost to the federal government over the life of the loans.
The nonpartisan congressional budget assessment is the first comprehensive, official cost estimate of Biden’s student debt plan released by a government body. Additionally, it fuels the argument over whether the loan relief provided to tens of millions of borrowers is appropriate or a misuse of tax-payer money.
Top congressional Republicans who have criticized Biden’s student loan reduction program asked for the CBO report. Labor Committee Republican Leader Virginia Foxx (R-NC) says the report is proof that the Biden administration’s plan is too costly.
“CBO’s $400 billion cost estimate shows this administration has lost all sense of fiscal responsibility. It is just the tip of the iceberg” said Foxx in a released statement. “Rather than working with Congress to bring down college costs, President Biden has opted to bury the American people under our unsustainable debt.”
Approximately 43 million borrowers makeup the $1.6 trillion-plus federal student loan portfolio.
The majority of federal student loan borrowers will be qualified for up to $10,000 in relief. But borrowers of federal student loans who also received Pell grants would be eligible for loan forgiveness of up to $20,000 under Biden’s plan. An estimated 95 percent of borrowers would qualify for the program based on their income.
Student loan forgiveness was a big part of President Biden’s campaign in 2020 and he has since been under pressure to follow through.
Read the report from the Congressional Budget Office here.