President Joe Biden’s latest student loan scheme will cost taxpayers $475 billion dollars over the next decade, according to a respected model of the federal budget.
The Penn Wharton budget model estimated Monday evening that President Biden’s new Income-Driven Repayment Plan will cost nearly half a trillion dollars. About $200 billion of that cost will come from payment reduction for the $1.64 trillion in loans already outstanding in 2023. Another $275 billion of costs comes from reduced payments for about $1.03 trillion in new loans that we estimate will be extended over the next 10 years.
The maximum estimate of the costs of Biden’s student loan scheme is $558 billion. The minimum estimate is $339 billion.
When the Biden administration announced the program it said $39 billion would be “forgiven” for 804,000 Americans. As the Penn Wharton figures demonstrate, the costs of the loans are really being transferred to taxpayers rather than forgiven.
The people behind the model estimate that about 53 percent of the current loan volume will move to the new program after it goes active in July 2024.