President Biden’s latest student loan cancellation plans will increase the total cost to taxpayers to a whopping $559 billion and benefit households earning more than $300,000 in annual income the most, according to a new study.
The University of Pennsylvania’s Penn Wharton Budget Model estimates that several new student loan debt cancellation provisions announced by the Biden administration last week will cost taxpayers $84 billion over 10 years.
The $84 billion figure is in addition to the $475 billion in projected costs over a decade for Biden’s Saving on a Valuable Education (SAVE) Plan – an income-driven repayment scheme that the 81-year-old president rolled out last summer.
The House Budget Committee’s Republican chairman slammed Biden’s latest student loan debt cancellation announcements.
Aside from the new $559 billion price tag, the Penn Wharton Budget Model finds that the new plan “will also relieve some longer-term student debt for about 750,000 households making over $312,000 in average household income.”
“The main reason for this high average household income is that the SAVE plan already provides long-term debt relief to households with lower incomes,” the study notes.
Households earning more than $312,000 in income per year, with more than 20 years in repayment, will see an average of $25,541.39 in debt relief under Biden’s new plan, far above the $4,899.26 average, according to the Penn Wharton model.
The administration’s new plan cancels student loan debt — without income limits — for borrowers who only have undergraduate student debt and entered repayment 20 years ago and for those with graduate student debt that first entered repayment 25 or more years ago.
The Penn Wharton Budget Model finds that student loan borrowers in households earning more than $312,000 in average income will see the most amount of debt canceled. Getty Images for We, The 45 Million
House Budget Committee Chairman Jodey Arrington (R-Texas) slammed Biden’s student loan cancellation plan in the wake of Penn Wharton’s findings, arguing that the policy is unconstitutional and part of the president’s “quest to buy votes.”
“In reality, his plan will shift the responsibility of paying for loans owed by high-income earners who freely incurred them onto the backs of all taxpayers, many of whom do not even have a college degree,” Arrington said in a statement.
“[Biden’s] administration is dead set on circumventing the Supreme Court, defying Congress, and saddling our country with more debt,” the Texas Republican added.
The Post has reached out to the Department of Education for comment.
The Penn Wharton model does not take into account the administration’s April 12 announcement that it would also cancel $7.4 billion in student debt for 277,000 additional borrowers.
Education Secretary Miguel Cardona argued last week that the administration’s policies “give hardworking Americans some breathing room” and said the administration “will remain relentless in our pursuit to bring relief to millions across the country.”
Under the Biden administration’s various student loan cancellation programs, at least 10% of borrowers have “now been approved for some debt relief,” according to the Education Department.
Biden rolled out the SAVE Plan just weeks after the Supreme Court struck down his $430 billion student debt cancellation gambit for more than 40 million borrowers in June 2023.
Eleven Republican-led states have filed a lawsuit against Biden and Cardona in an attempt to block Biden’s SAVE Plan.