Biden’s student loan foreclosure plan could cost $400 billion, CBO says – Boston News, Weather, Sports

(CNN) — President Joe Biden’s plan to eliminate up to $20,000 in state student loan debt for low- and middle-income borrowers could cost $400 billionaccording to a Congressional Budget Office report released Monday.

Biden announced that forgiveness plan in August after facing mounting pressure from progressives to largely cancel some student loan debt.

The Ministry of Education plans to release an application for the program in October. No student debt has yet been waived.

The CBO, which conducts impartial analysis for Congress, warned in the report that the estimates are “highly uncertain.”

The estimate relies on a number of assumptions, including how many eligible borrowers will apply and what portion of the outstanding federal student loan debt may not have been repaid during the life of the loans due to other existing forgiveness programs, for example. Those projections depend in part on future economic conditions, the CBO said.

The White House is expected to release its own estimate of Biden’s student loan forgiveness plan in the coming weeks. The government previously said the plan would reduce cash flow by about $24 billion in the first year.

Under Biden’s planindividual borrowers who earned less than $125,000 in either 2020 or 2021 and married couples or heads of households who earned less than $250,000 annually during those years will have up to $10,000 of their federal student loan debt forgiven.

If a qualified borrower also has a federal Pell grant During college enrollment, the individual is eligible for up to $20,000 in debt relief. Pell Scholarships are awarded to millions of low-income students each year based on factors such as the size and income of their family and the fees charged by their college. These borrowers are also more likely to have difficulty paying off their student debt and default.

Key Democratic lawmakers, including Senate Majority Leader Chuck Schumer and Massachusetts Senator Elizabeth Warren, have pressured Biden since taking office to cancel up to $50,000 in state student loan debt per borrower. While the president’s plan will forgive less debt than they called for, Democrats have welcomed the move.

In a joint statement released Monday, Schumer and Warren called Biden’s upcoming cancellation campaign “transformative” for the middle class.

“Today’s CBO estimate makes it clear that millions of middle-class Americans have more breathing room thanks to President Biden’s historic decision to cancel student debt,” they said.

But Republicans have criticized Biden’s student loan forgiveness plan as a giveaway that unfairly transfers wealth from the working class to people who went to college.

“CBO’s $400 billion cost estimate shows that this administration has lost any sense of financial responsibility,” North Carolina Rep. Virginia Foxx, Republican chairwoman of the House Education and Labor Committee, said in a statement statement on Monday.

Some Republican attorney generals and conservative groups are working on one legal strategy to prevent the plan from going into effect.

The CBO estimate didn’t take into account Biden’s proposal to streamline the income-based repayment schedule to reduce monthly payments from future student borrowers, which could push up the overall cost to the government.

Maya MacGuineas, president of the independent group dubbed the Committee on Federal Budget Responsibility, has also criticized Biden’s student debt action, saying in a statement Monday that it would “doubly wipe out the 10-year savings from the Inflation Control Act.”

That Anti-Inflation Acta comprehensive health and climate bill endorsed by Biden was passed in August.

“The Biden-Harris administration’s student debt relief plan is giving tens of millions of working families breathing room,” said White House spokesman Abdullah Hasan.

“This is in stark contrast to the Trump tax bill, which added nearly $2 trillion to the deficit and gave most of the benefits to large corporations and the wealthiest individuals,” he added.

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https://whdh.com/news/cbo-says-bidens-student-loan-cancellation-plan-could-cost-400-billion/ Biden’s student loan foreclosure plan could cost $400 billion, CBO says – Boston News, Weather, Sports

Nate Jones

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