Biden’s student debt plan estimated to cost $400 billion

President Biden’s plan to forgive up to $20,000 in student debt for borrowers may cost $400 billion, the Congressional Budget Office said Monday.

The president’s plan cancels $10,000 in student debt for borrowers making less than $125,000. Borrowers who received Pell Grants will be eligible to have another $10,000 canceled.

The White House said in a statement Monday that the plan will bring relief to struggling borrowers and noted that the CBO’s estimate of costs in the first year of cancellation — $21 billion — is lower than the Biden administration’s $24 billion estimate, according to PBS.

Senators Elizabeth Warren of Massachusetts and Chuck Schumer of New York, who both advocated for debt cancellation, said in a statement Monday that they “don’t agree with all of C.B.O.’s assumptions that underlie this analysis.”

“But it is clear the pandemic payment pause and student debt cancellation are policies that demonstrate how government can and should invest in working people, not the wealthy and billionaire corporations,” they added.

The CBO also cautioned that its estimates are “highly uncertain.” Still, Republican critics of debt cancellation quickly cited the report as evidence that Biden’s plan is too costly.

“Every American should be outraged by the president’s cynical ploy and by the real cost it places on those who stand to benefit the least,” said Senator Richard M. Burr of North Carolina, according to The New York Times.