The Congressional Budget Office released an official cost estimate for President Joe Biden’s student loan cancellation, putting the cost at more than $400 billion.
“As of June 30, 2022, 43 million borrowers held $1.6 trillion in federal student loans,” the group said. “About $430 billion of that debt will be canceled, CBO estimates.”
Other policy groups have put the cost of Biden’s student loan cancellation in the same ballpark.
“CBO’s new estimate confirms the outrageous cost of the White House plan to cancel large amounts of student debt, by executive order, to nearly all borrowers almost regardless of need,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget. “The debt cancellation and pause alone will cost $420 billion — a bit more than we previously thought — and costs could reach $510 to $610 billion with their IDR changes. The Biden Administration’s failure to release their own cost estimate should have been a red flag.”
IDR stands for “income-driven repayment.”
Lawmakers blasted Biden, calling the cancellation a “bailout.”
“The Biden Administration’s student debt bailout is even more expensive than we initially thought,” said U.S. Representative Andy Biggs (R-Arizona). “The current bailout will cost Americans $420 BILLION, according to the CBO. This is likely the most expensive executive action in American history.”
But the Biden administration has defended the plan, saying it will bring relief to Americans struggling to repay, especially those who did not graduate and didn’t get the higher salaries commensurate with the education they got.
“Nearly 90% of relief dollars will go to those earning less than $75,000 per year — and no relief will go to any individual or household in the top 5% of incomes in the United States,” the White House said.
An analysis from the Committee for a Responsible Federal Budget also found that debt will rise to pre-cancellation levels within a decade.
“We estimate that if all eligible borrowers receive debt cancellation, the overall student debt portfolio would return to its current level of $1.6 trillion in five and a half years – in 2028,” the Committee for a Responsible Federal Budget said. “In inflation-adjusted dollars, student debt would return to its current level in 2031.”
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