(ReclaimingAmerica.net) – Joe Biden’s new debt relief plan for student loan borrowers over ten years will cost the American taxpayer even more than the previous $400 billion plan killed by the US Supreme Court last month, according to new estimates.
Biden’s SAVE (“Saving on a Valuable Education) plan is supposed to come into force on July 1, 2024, according to a White House release from June 30.
It would slash “income-based student loan payments in half, eliminate monthly payments for minimum-wage earners and forgive all outstanding debt after ten years of payments for student borrowers who took $12,000 or less,” while “most community college students wouldn’t have to pay back any debt,” The New York Post reports.
According to a new estimate under the Penn Wharton Budget Model, SAVE will cost the federal budget $475 billion over ten years, roughly $75 billion over the cost of the previous plan.
The Penn model shows that taxpayers will face $200 billion in costs since only about half the $1.64 trillion in outstanding loans will be covered.
The taxpayers will also have to foot another $275 billion attributable to payment reductions for $1.03 trillion in new student loans into the next decade.
The model’s estimated range for the cost of the Income-Driven Repayment (IDR) plan varies from $390.9 billion to $558.8 billion.
“Due to the increased generosity of the newly proposed IDR plan, future student borrowers have the incentive to increase their federal student loan borrowing,” Penn Wharton junior economist Penlei Chen concluded.
Another think tank, the nonpartisan Urban Institute, came to a similar conclusion, stating that Biden’s new plan would mean fewer than 25% of all bachelor’s degree recipients would be forced to pay back their loans in full.
“Biden’s newest student loan scheme only transfers the burden from those who willingly took out loans to Americans who never attended college or who already fulfilled their commitment,” US Senator Bill Cassidy (R-LA) declared in a statement.
Cassidy, who chairs the Senate Health, Education, Labor and Pensions Committee, slammed Biden’s plan as “irresponsible” and “unfair.”
Last week, Biden’s Education Secretary Miguel Cardona said his department would cancel federal student loans worth $39 billion for 804,000 student borrowers who had been paying loans for 20 or 25 years.
— New York Post (@nypost) July 17, 2023