The Biden administration’s latest student loan forgiveness plan is estimated to cost taxpayers at much as half a trillion dollars, according to a Penn Wharton Budget Model report.
In an effort to circumvent the Supreme Court’s recent ruling that blocked the administration’s plan to grant forgiveness to nearly 40 million Americans, the Department of Education (DOE) announced that it would use the Higher Education Act and an expansion of income-driven repayment plans in order to wipe student debt. The expansion of the income-driven repayment plans is estimated to cost taxpayers as much as $558.8 billion over the next ten years, according to a Penn Wharton Budget Model report. (RELATED: Liberal Activists Are Already Brainstorming Ways Biden Can Skirt SCOTUS’ Student Loan Ruling)
“Make no mistake, 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 to pay off their loans,” Republican Louisiana Sen. Bill Cassidy said in a press release. “This IDR [income-driven repayment] rule is as irresponsible as it is unfair.”
The latest estimate is more than double what the Congressional Budget Office predicted, the press release stated.
The DOE announced on July 14 that it was beginning to notify borrowers that their federal student loans had been automatically wiped. In total, the DOE plans to initially wipe $39 billion of student loan debt for more than 804,000 borrowers.
Borrowers who miss payments within the first year of the new DOE repayment plan will not be penalized, put in default or reported to credit or collection agencies. The administration expects that the expansion of the income-driven repayment plan will save all student loan borrowers at least $1,000 per year.
The DOE did not immediately respond to the Daily Caller News Foundation’s request for comment.
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