WASHINGTON — President Joe Biden’s decision to forgive some federal student debt will cost the U.S. Treasury at least $400 billion, the Congressional Budget Office estimated.
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 says that the move will reduce the present value of outstanding loans by $400 billion based on 30 years of reduced future cash inflows.
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 a Responsible Federal Budget pegs the cost of those changes at an additional $120 billion.
