Study says cost of Biden’s student loan plan will be far higher than expected

President Joe Biden has touted a plan allowing those who make less than $125,000 per year to offload $10,000 worth of student debt onto taxpayers, a figure that rises to $20,000 for those who received Pell grants.

Yet as Fox Business reported, a new study suggests the price tag for doing that will be much bigger than previously thought. 

Cost could hit $1 trillion

The network pointed to research released by the University of Pennsylvania’s Wharton School of Business last Friday which argued that Biden’s student loan scheme will cost up to $1 trillion over the next decade.

“We estimate that President Biden’s proposed student loan debt cancellation alone will cost between $469 billion to $519 billion over the 10-year budget window, depending on whether existing and new students are included,” it stated.

However, that estimate is predicated on “strict ‘static’ assumptions” regarding the new income-driven repayment (IDR) program and ballooned when researchers assumed that more people would begin taking up the offer.

That’s because there would be “financial incentives for future borrowers to shift education financing toward more borrowing” and thus substantially drive up the cost.

Another potential concern is that the Department of Education may begin automatically enrolling qualified borrowers, further exacerbating the financial strain.

“Depending on future details of the actual IDR program and concomitant behavioral changes, the IDR program could add another $450 billion or more,” the analysis found. “Thereby raising total plan costs to over $1 trillion.”

The study’s authors concluded that variances in IDR require “future study” in order to obtain a better understanding of the plan’s true costs.

Critics say plan is a vote buying scheme which will spike inflation

Critics have attacked Biden’s student loan program as a cynical attempt to buy votes at the cost of escalating inflation.

One of them is The Federalist contributor Jordan Boyd, who noted, “Surveys suggest that approximately 1 in 5 Democrats wouldn’t vote for Biden if he didn’t do something about student loan debt.”

Even left-leaning pollster Nate Silver acknowledged the “transactional” nature of the move in a series of tweets, writing that “while other policies would be more economically progressive, it fairly efficiently redistributes well-being toward people in the Democratic coalition. Youngish, middle-class-ish college/grad school attendees = a *very* D group.”

Share on facebook
Share To Facebook

Welcome to our comments section. We want to hear from you!

Any comments with profanity, advocacy of violence, harassment, personally identifiable information or other violations will be removed. If you feel your comment has been removed in error please contact us!

Latest Posts