REPORT: Biden’s new student loan repayment plan would cost A LOT more than White House projected

A key part of President Biden’s student loan debt plan that would cut the monthly bill for certain borrowers could cost up to $361 billion over the next decade, according to new findings from the Penn Wharton Budget Model.

The proposed rule from the Education Department would overhaul one of the income-driven repayment plans – known as REPAYE – by further reducing borrowers’ payments to a certain percentage of their discretionary income.

“We cannot return to the same broken system we had before the pandemic, when a million borrowers defaulted on their loans a year and snowballing interest left millions owing more than they initially borrowed,” Education Secretary Miguel Cardona said in a statement.

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The report notes that Biden’s debt relief plan would reduce monthly obligations for undergraduate borrowers by as much as half, but it is projected to cost between $333 billion to $361 billion, according to the Penn Wharton Budget Model.

The projected cost is over DOUBLE the net federal budget impact of $137.9 billion provided by the Department of Education.

Fox Business explained:

The discrepancy is because the government assumed that enrollment in the income-driven plans would remain constant, while Penn Wharton projected the more generous plan would cause the take-up rate to jump from 33% to 75% of eligible loan volume. 

Meanwhile, Sec. Cardona tweeted on Monday, “Over 40M borrowers qualify for student debt relief – with 90% earning less than $75,000/yr. That’s 321,000 in Connecticut, 228,000 in Kansas & 2.1M in Texas, who could avoid delinquency & default as they return to repayment.”

Over 40M borrowers qualify for student debt relief – with 90% earning less than $75,000/yr.

That’s 321,000 in Connecticut, 228,000 in Kansas & 2.1M in Texas, who could avoid delinquency & default as they return to repayment. https://t.co/OsY43EzZ6r

— Secretary Miguel Cardona (@SecCardona) January 30, 2023

Last week, Joe Biden and Senator Bernie Sanders teamed up in a video statement, pushing for student loan forgiveness, and blasting Republicans for opposing it.

Look, the opponents suing to stop my plan are the only thing standing between millions of Americans’ crushing student debt and relief. It’s frustrating, and I won’t stop fighting to get it done in the courts.

Allow me and my friend to explain. pic.twitter.com/h1mvaZPCwU

— President Biden (@POTUS) January 27, 2023

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