WASHINGTON — President Biden’s plan to wipe out significant amounts of student loan debt for millions of borrowers could cost nearly $400 billion, the nonpartisan Congressional Budget Office said in a report Monday.
The estimate renewed the debate between supporters of student loan forgiveness and those who say the initiative equates to reckless spending.
The CBO also said the plan’s full price tag could rise even higher as Mr Biden put a moratorium on federal student loan repayments until the end of the year, which could cost some $20 billion.
In August, Mr. Biden announced plans to waive $10,000 for those earning less than $125,000 per year and $20,000 for low-income families receiving Pell grants. The CBO expects that 90 percent of the 37 million borrowers with direct loans from the federal government will take advantage of loan forgiveness when they become available.
The White House indicated on Monday that it would go ahead with its plan despite criticism from conservative critics, who have vowed to launch legal challenges. On Monday, the White House press secretary, Karine Jean-Pierre, said the criticism amounted to “noise” and said Americans who deserve a significant portion of President Biden’s student debt relief plan should be granted an “too soon” pardon. Must be able to apply for. ,
In a call with reporters on Monday, administration officials called the estimate “highly uncertain.”
Still, the official timing for debt relief is uncertain; The Education Department said it would set up an application process by the end of the year.
About 60 percent of student loan borrowers have received Pell grants, and most come from families earning less than $30,000 a year. The Department of Education estimates that 27 million borrowers will be eligible for relief of up to $20,000.
Millions of other borrowers will be eligible for $10,000 in debt relief, as long as they make less than $125,000 a year or are in households with an income of less than $250,000. Borrowers will be assessed on the basis of income reported by them in 2021 or 2020.