President Joe Biden’s new student loan forgiveness plan would cost $84 billion if implemented, a new analysis found.
According to the Penn Wharton Budget Model, which released its analysis Thursday, the $84 billion is in addition to his previously stated SAVE plan, which the organization estimates could cost taxpayers $475 billion.
“We estimate that President Biden’s recently announced ‘New Plans’ to provide relief to student borrowers will cost $84 billion, in addition to the $475 billion that we previously estimated for President Biden’s SAVE plan,” PWBM said in its summary of the analysis. “Moreover, some debt relief in the New Plans accrues to borrowers in households with income more than the SAVE plan coverage.”
Biden’s new plan contains five main provisions: waiving accrued and capitalized interest for millions of borrowers; eliminating student debt for borrowers in repayment for 20 years or more; assisting borrowers who experience hardship in paying back their loans; automatically discharging debt for borrowers otherwise eligible for loan forgiveness under SAVE, closed school discharge, or other forgiveness programs, but not enrolled; and helping borrowers who enrolled in low-financial-value programs or institutions.
The majority of the cost will come from waiving accrued and capitalized interest for millions of borrowers, at a cost of $57.75 billion. The next two provisions will make up most of the remainder, with the fourth provision already being covered in the SAVE plan.
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PWBM estimated that the new plan will provide a positive level of debt relief for about 17.2 million borrowers, though the Biden administration claims it will provide relief for 25 million to 30 million.
The cost is likely to increase Republican opposition to the plan, which was a key campaign promise of Biden.
