White House responds to $400 billion student loan forgiveness estimate

A new estimate from the Congressional Budget Office for the total cost of President Biden’s student loan forgiveness plan, and the price tag now being floated is $400 billion.

The CBO wrote a letter to President Biden giving him its revised cost estimate for the forgiveness plan.

“CBO estimates that the cost of student loans will increase by about an additional $400 billion in present value as a result of the action canceling up to $10,000 of debt issued on or before June 30, 2022, for borrowers with income below specified limits and an additional $10,000 for such borrowers who also received at least one Pell grant,” the letter reads.

The letter also estimated that the extended pause on student loan payments until the end of 2022 would add another $20 billion to the total. 

“The cost of outstanding student loans will increase by $20 billion because an action suspended payments, interest accrual, and involuntary collections from September 2022 to December 2022” the letter says.

The White House responded by defending the increase to the federal deficit. “The Biden-Harris Administration’s student debt relief plan provides breathing room to tens of millions of working families,” White House spokesperson Adbullah Hasan said in a statement.

“It gives people who have been struggling with student debt that shot they want at starting a business, buying that first home, or just having a slightly easier time paying the monthly bills,” he added. “It’s a stark contrast to the Trump tax bill, which ballooned the deficit by nearly $2 trillion and provided the vast majority of benefits to big corporations and the wealthiest individuals.”