Student Loan Debt Wipeout to Cost $24 Billion per Year, White House Says
The White House said Friday that President Joe Biden’s student loan debt forgiveness program would cost taxpayers $24 billion per year but that it considers it “fully paid for” because it’s offset by the administration’s deficit reduction.
White House Press Secretary Karine Jean-Pierre disclosed the Biden administration’s cost estimate for the debt wipeout program in an Aug. 26 statement, which came days after several independent estimates put the figure at between $33 billion and $50 billion per year.
“We estimate that the Administration’s targeted student debt relief plan will reduce average annual receipts in the student loan program by approximately $24 billion per year,” Jean-Pierre said.
The figure provided by Jean-Pierre means that, over a ten-year period, the forgiveness scheme will cost the government $240 billion in lost revenue.
But White House officials have said they consider the program completely paid for as the administration is on track for $1.7 trillion in deficit reduction and, rather than requiring new outlays by taxpayers, the $240 billion in lost revenue would just cut the deficit reduction figure to around $1.5 trillion.
“Practically speaking, compared to the previous year, 1.7 trillion more dollars are coming into the Treasury than are going out,” Bharat Ramamurti, the deputy director of the National Economic Council, said at an Aug. 26 briefing at the White House.
“And we’re using a portion of that—a very small portion of it—to provide relief to middle-class families, consistent with the President’s plan. So, yes, we consider it fully paid for,” he said.
Cost Estimate Will ‘Necessarily Change’
The $240 billion cash-flow impact projection is based on the assumption that 75 percent of eligible participants take part in the program, the White House said in an Aug. 26 analysis.
The Biden administration expects this estimate to “necessarily change” in line with the actual
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