(RightIsRight.co) – President Joe Biden’s decision in favor of partial student loan forgiveness will cost American taxpayers no less than $400 billion, according to an assessment by the Congressional Budget Office (CBO), a non-partisan body.
Last month, Biden announced that he had decided to use his COVID-19 emergency powers to forgive $10,000 in federally owned student debt, or $20,000 for Pell Grant recipients, for borrowers earning up to $125,000 per year.
The CBO announced its assessment of Biden’s student loan forgiveness policy in a memo on Monday.
“The cost of student loans [to the government] will increase by about an additional $400 billion in present value as a result of the action canceling up to $10,000 of debt issued on or before June 30, 2022, for borrowers with income below specified limits and an additional $10,000 for such borrowers who also received at least one Pell grant,” the budget office said.
Besides that, the CBO estimated that the decision to defer payments on student loans until January 1, 2023, which Biden also announced in August, will cost US taxpayers another $20 billion.
The estimate of the Congressional Budget Office led Republican political figures to react strongly on social media.
“This isn’t constitutional. A President can’t just give away $400 billion,” Rep. Thomas Massie (R-KY) wrote on Twitter.
“Joe Biden isn’t ‘canceling’ student loan debt. He’s just forcing us to pay for it,” tweeted Abigail Marone, a spokeswoman for Sen. Josh Hawley (R-Mo.).
The Committee for a Responsible Federal Budget (CRFB), a Washington, DC-based nonprofit, reacted by pointing out that the CBO estimate did not factor in another section of Biden’s plan, the so-called income-driven repayment.
The policy caps the amount borrowers pay at 5% of their monthly income. Before that, the cap stood at 10%.
According to the CRFB, the income-driven repayment would increase the actual cost of Biden’s loan forgiveness plan by $90 – $190 billion, meaning that it could end up costing the American people more than $600 billion altogether.
“This might be the most costly executive action in history,” MacGuineas added. “It’s unacceptable that the President would implement it without offsets and without Congressional approval,” commented CRFB President Maya MacGuineas
She emphasized that Biden’s student debt plan “would wipe out the ten-year savings from the Inflation Reduction Act twice over, worsen inflationary pressures, and deliver benefits to millions of Americans with advanced degrees in upper-income households.”
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