(The Hill) – The Biden administration’s sweeping effort to provide student loan forgiveness for some Americans will cost about $400 billion, according to a new report by Congress’ nonpartisan budget scorekeeper.
The Congressional Budget Office (CBO) said 43 million borrowers shared $1.6 trillion in federal student loan debt as of June 30. Under Biden’s plan, about $430 billion of that debt would be wiped out, reports show.
CBO also estimated the cost of the Biden administration’s latest renewal of the moratorium on federal student loan payments and interest accruals, which had been set to expire at the end of August.
The extension, which runs until the end of the year, is estimated to cost $20 billion in a new report.
According to CBO’s analysis, of the nearly 37 million borrowers who have direct loans from the federal government, 95 percent meet the income eligibility requirements under the new forgiveness plan. Nearly half of those borrowers will see all of their outstanding debt canceled, the CBO said.
CBO also predicts that nearly 65 percent of borrowers who meet income eligibility requirements will also receive at least one Pell Grant and that “90 percent of income-eligible borrowers will apply for debt cancellation.”
The reporting comes as fiscal hawks and Republicans criticize recent actions by the Biden administration as too costly.
In a statement reacting to the report Monday afternoon, Maya MacGuineas, president of the Committee for a Responsible Federal Budget, called the price tag “outrageous,” saying that “this could be the most expensive executive action in history.”
At the same time, advocates and progressives have pushed the Biden administration to go even further, touting widespread debt forgiveness as a way to help low-income households struggling with repayments and borrowers of color facing huge burdens in the student loan system.
Senate Majority Leader Charles Schumer (DN.Y.) and Senator Elizabeth Warren (D-Mass.), who pushed Biden to forgive $50,000 in federal student debt per borrower, said in a statement on Monday that the latest estimates. “It’s clear that millions of middle-class Americans have more breathing room thanks to President Biden’s historic decision to cancel student debt.”
Although they also said they did not agree with some of the CBO’s assumptions underlying the analysis, they added, “Clearly the pandemic payment pause and student loan cancellation are policies that show how the government can and should invest in working people, not wealthy corporations and billionaires.”
“In contrast to President Trump and the Republicans who gave giant corporations $2 trillion in tax breaks, President Biden is delivering transformative middle-class relief by canceling student debt for working people who need it most — nearly 90% of the relief dollars will go to people with incomes less than .$75,000 a year,” he added.
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