President Biden’s student loan forgiveness plan is expected to cost the federal government $379 billion, according to a new estimate from the U.S. Department of Education released on Thursday.
Over the next decade, the one-time debt cancellation of up to $20,000 is estimated to cost about $30 billion a year, the Department of Education found. However, the Department noted that its estimate is based on “highly uncertain assumptions about future economic conditions and participation rates.”
The Department of Education’s estimate is not substantially far off from that of the Congressional Budget Office (CBO) released on Monday. The CBO report put the total cost at around $400 billion.
The White House — which offered its own estimate of $240 billion in late August — pushed back on the CBO’s report on Monday, noting that the CBO itself said its estimate was highly uncertain.
The CBO based its report on the assumption that 90 percent of borrowers would take advantage of the program, while the Department of Education assumed slightly fewer — 81 percent — would seek debt relief. However, the White House has emphasized that participation rates may not be quite so high, with less than half of eligible borrowers making use of previous debt relief programs.
Biden’s student loan cancellation program — which would cancel up to $10,000 for most borrowers and up to $20,000 for Pell grant recipients who make under $125,000 a year — has faced major pushback from Republicans since it was first announced in August.
Six GOP-led states filed suits on Thursday, claiming Biden does not have the authority to cancel student loan debt without permission from Congress.
The first group to challenge the Biden policy, the Pacific Legal Foundation, saw its lawsuit denied by a federal judge on Thursday. The judge denied the lawsuit after the Department of Education updated its website to clarify that no one would be forced to take part in the program.
The department also updated its website on Thursday to exclude private borrowers from participating in the debt relief program, in an abrupt shift that would impact an estimated 4 million borrowers with privately held loans.