According to recent projections from the Congressional Budget Office, the cost of the Biden administration’s plan to cancel a sizable chunk of federal student debt will be close to $400 billion.
The director of the CBO, Phillip Swagel, predicted that the student loan plan announced by the Biden administration last month will cost about $400 billion but noted that the prediction was “highly uncertain” in a letter to Sen. Richard Burr (R-NC) and Rep. Virginia Foxx (R-NC), the senior Republicans on the Senate and House education committees.
The CBO also calculated the cost to the government of the administration’s decision to continue the suspension of loan repayment through the end of the year at $20 billion.
The Biden administration made the announcement last month that it would forgive $20,000 of student loan debt for each borrower who got a Pell Grant as part of their financial assistance package and had an annual income under $125,000. The remaining debtors in the same salary range are all qualified for a $10,000 loan forgiveness.
The administration’s adjustments to the income-driven repayment scheme, which reduce borrowers’ required monthly payments depending on their income, were not taken into consideration by the CBO in its study.
The estimations of how much debtors would have paid back and how much they would pay back under the executive order to cancel debt are the most unclear parts of the equation, according to Swagel’s letter.
According to the CBO’s assessment, 65% of student loan debtors qualified for the full $20,000 cancellation while 95% qualified for partial forgiveness. The CBO predicted that 90% of those who were qualified would request debt forgiveness, and that 45% of borrowers would have their full sum erased.
Foxx criticized the Biden administration in a statement after the CBO’s estimate was released, claiming that the White House had “lost all sense of fiscal responsibility” and that the estimate was “just the tip of the iceberg” because it did not take into account “this administration’s other efforts to transfer wealth from college graduates to hardworking taxpayers who never set foot on a college campus.”
President Biden has chosen to bury the American people beneath our unmanageable debt, Foxx said, rather than working with Congress to lower college expenses. Tuesday morning, a public interest lawyer sued the Department of Education to stop President Biden’s “illegal” decision to forgive more than $500 billion in student loan debt.
Last month, Biden said that he would forgive up to $20,000 of federal student loan debt for anyone who qualify and make less than $125,000 annually.
The lawsuit was filed against the Department of Education on Tuesday in the United States by Frank Garrison, an attorney with the Pacific Legal Foundation. District Court for Indiana’s Southern District.
To stop the loan distribution from taking place, Garrison and his attorneys at the Pacific Legal Foundation requested a temporary restraining order.
Garrison is eligible for the congressionally mandated Public Service Loan Relief program, which entitles him to debt forgiveness following ten years of student loan repayment.
Because Indiana intends to tax the forthcoming student loan cancellation as income, Garrison would be hit with a new state tax bill under the Biden administration’s new giveaway that he would not have under his current PSLF scheme.
Garrison “will be faced with a tax burden that puts him in a worse financial situation than continuing with his repayment schedule under PSLF,” according to his attorneys.
The Pacific Legal Foundation stated in a release on Tuesday that the man “did not ask for cancellation, does not want it, and has no means to opt out of it.”
The Biden administration’s use of the HEROES Act, which enables the government to modify loans to assist veterans and their families as needed during times of war or other national emergencies, according to Garrison and his attorneys, is a “flimsy pretext for a major policy chance that Congress has declined to enact,” they claim.
Caleb Kruckenberg, an attorney with the Pacific Legal Foundation, said that Congress had not given the executive branch permission to unilaterally eliminate student debt. The creation of a $500 billion program by the executive branch via press release without any statutory authorization or even the most basic notice and comment process for new rules is flagrantly unconstitutional.
It is crucial to understand that this does not cover the cost of college for Americans. That was previously paid for. This is paying off the debt of a group of college-educated Americans who are already close to being financially independent. The government will take $300 billion in wealth from Americans in order to do this. What sane individual thinks this is the greatest use of such an astronomical expense, considering the status of our economy right now?
What if the government left the student loan industry and made schools and universities responsible for approving loans for their students instead? Watch what would happen to the university’s tuition rates if the government gave up its role as a bank, which it ought to have done long before they created this problem in the 1960s.
Anything in which the government is engaged costs exponentially more money.
There are no tyrants in America. We have three equally powerful parts of government, but only the Congress has the power to enact legislation or approve the use of tax money. As a result, taxation is always accompanied by legislative branch representation.