Biden's new student-loan plan could cost $361 billion — twice what the administration estimates
CBSN
The Biden administration's backup plan for tackling student debt could cost twice as much as the government estimates, according to a new analysis. That projection comes as the White House's main debt-relief initiative — a program to forgive up to $20,000 in student loans per borrower — remains mired in legal limbo.
Plan B for the Biden administration is focused on reforming income-driven repayment plans, or IDRs, which peg a person's monthly student-loan payment to their income. In theory, the plans are aimed at lowering monthly bills. But they have been plagued by complicated rules and issues like "negative amortization," which allows a borrower's balance to snowball despite making monthly payments.
The cost of Biden's IDR reform effort could be as high as $361 billion over 10 years, according to the Penn Wharton Budget Model, a group of economists and data scientists at the University of Pennsylvania who analyze public policies to predict their economic and fiscal impact. That's more than twice as much as the U.S. Department of Education's estimated cost of $138 billion over the next decade.
