Biden Administration’s Latest Push To Cancel Student Loan Debt Could Cost Hundreds of Billions, Watchdog Group Says

The Biden administration is unveiling details of its latest plan to cancel student loan debt, as the administration charges ahead to fulfill President Biden’s campaign promises despite an initial attempt being blocked by the Supreme Court. In a set of draft rules proposed on Tuesday, the Education Department detailed its plans to cancel the student debt of more than 30 million borrowers — which a fiscal watchdog group, the Committee for a Responsible Federal Budget, estimates would cost anywhere from $250 to $750 billion. “Today’s announcement shows that the Biden-Harris Administration is continuing to fulfill our promises to fix a broken higher education system,” the education secretary, Miguel Cardona said in a statement, adding that student loan forgiveness helps to create an “America that lives up to its highest ideals.”Mr. Biden first announced his plan in Wisconsin last week, despite anticipated legal challenges in the wake of the Supreme Court blocking his earlier loan forgiveness plan. The draft rules will be formally published on Wednesday and available for public comment.Since the announcement of his latest loan forgiveness push, Mr. Biden is already facing lawsuits from more than a dozen Republican-led states.The Education Department notes that the plan would cancel “runaway interest” for “more than 25 million borrowers who owe more than they originally borrowed.” It also seeks to forgive the debt of some 2.6 million borrowers who entered repayment at least 20 years ago and still have outstanding debt. The plan also seeks to eliminate debt for borrowers who attended institutions or enrolled in programs that “failed to provide sufficient value.” The Education Department also noted that it is working on a proposal to “authorize the automatic forgiveness of loans for borrowers at a high risk of future default” or those facing hardships such as medical or caregiving expenses. It is that hardship proposal that is the “most unclear and potentially the most costly part of their proposal,” the Committee for a Responsible Federal Budget notes, “since cancellation could be both wide-ranging and ongoing.”The committee estimates that the “hardship” component of the plan could cost between $100 to $600 billion over ten years.“It is unclear how the Administration will define hardship, but they discuss 16 possible criteria such as other consumer debt, age, and health care or housing expenses and also declare hardship could be defined based on ‘any other indicators of hardship identified by the Secretary,’” the committee notes. As far as the total cost of the student loan debt plan, the committee notes it would “be in line” with the $400 billion cost of the original debt cancellation plan that was blocked by the Supreme Court — and “would be on top of more than $600 billion of debt cancellation already enacted through unilateral executive action.”

Biden Administration’s Latest Push To Cancel Student Loan Debt Could Cost Hundreds of Billions, Watchdog Group Says

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