President Joe Biden’s latest student loan forgiveness plan, unveiled last week, could cost the government upward of $750 billion, according to analysis by a government watchdog group.
Biden’s new plan comes less than a year after the Supreme Court struck down his last effort. It would eliminate debt for over 30 million people.
The Biden administration released its preliminary amendments to the Higher Education Act on Tuesday. In the proposed rule, the Biden administration would cancel accumulated interest for borrowers with balances higher than what they borrowed, automatically cancel loans for borrowers eligible under the Public Service Loan Forgiveness or the Saving on a Valuable Education program, cancel undergraduate loans over 20 years old and graduate loans over 25 years old, and cancel the debt of students who attended “low-financial-value” institutions. Based on these guidelines, the Department of Education estimates that $150 billion of debt would be eliminated.
However, the current proposal doesn’t include what is likely the most expensive part: eliminating debt for borrowers at a high risk of default rule and those who show financial hardship. This part of the plan is estimated to cost between $100 billion and $600 billion over a decade. The default provision only extends for the next two years, but the hardship component has no expiration date, meaning future administrations could cancel student loan debt.
CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER
Biden’s new plan has the potential to be more costly than his $400 billion blanket debt cancellation plan that was struck down by the Supreme Court. Biden’s new plan would be in addition to more than $600 billion of debt already eliminated by the administration.
The Biden administration is facing two separate lawsuits representing 18 different states over his SAVE Plan.
