President Biden's decision to forgive some federal student debt will cost at least $400 billion over 10 years, the Congressional Budget Office estimated, which would wipe out the $238 billion in deficit reduction from his tax and climate plan.
Biden in August announced student debt relief of $10,000 per borrower, subject to income caps of $125,000 per individual and $250,000 per household. An additional $10,000 can be forgiven for Pell Grant recipients. The CBO estimates these moves will cancel $430 billion in total debt, but that some of this is owed by individuals in income-driven repayment plans and would be canceled anyway.
The nonpartisan budget agency said Biden's suspension of student debt payments through the end of the year could cost an additional $20 billion. It did not account for changes Biden made to income-driven repayment plans. The watchdog Committee for an Responsible Federal Budget pegs the cost of those changes at an additional $120 billion.
However, the CBO says its estimate is "highly uncertain" because of assumptions it makes about the level of repayments that would have occurred absent the debt relief depend on future economic conditions.
For comparison, the tax and climate legislation known as the Inflation Reduction Act, which passed earlier in August, was scored as reducing deficits over 10 years by $58 billion, with an additional reduction of $180 billion factored in due to anticipated new revenue from more tax audits.
The Biden student loan program is one of the costliest initiatives of the president's term, based on the CBO analysis, and Congress had no direct say in the matter. The $1,400 stimulus checks from the American Rescue Plan passed by Congress cost just a little more than student debt, $410.6 billion, according to the Joint Committee on Taxation.
"This might be the most costly executive action in history," CRFB President Maya MacGuineas said in a statement. "It's unacceptable that the President would implement it without offsets and without Congressional approval."
The report was requested by Sen. Richard Burr of North Carolina and Rep. Virginia Foxx, two North Carolina Republicans. GOP lawmakers have criticized Biden's debt forgiveness as unfair to students who had paid off their loans and to taxpayers who never went to college.
