Debt Cancellation is Too Costly, CBO Confirms

Today, the Congressional Budget Office (CBO) estimated that the Administration’s proposal to cancel up to $10,000 or $20,000 of debt per student loan borrower and extend the current pause would cost $420 billion – slightly higher than our preliminary combined estimates of $350 to $410 billion. Its estimate does not include the cost of the Administration’s income driven repayment (IDR) policy, which could add another $90 to $190 billion in total costs.

We’ve previously shown that the Administration’s student debt proposals would be costly and inflationary, would drive up higher education costs and encourage low-value degrees, and would deliver large benefits to those with high lifetime earnings. The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget:

CBO’s new estimate confirms the outrageous cost of the White House plan to cancel large amounts of student debt, by executive order, to nearly all borrowers almost regardless of need. The debt cancellation and pause alone will cost $420 billion – a bit more than we previously thought – and costs could reach $510 to $610 billion with their IDR changes. The Biden Administration’s failure to release their own cost estimate should have been a red flag.

As CBO’s estimates help confirm, the President’s student debt plan would wipe out the ten-year savings from the Inflation Reduction Act twice over, worsen inflationary pressures, and deliver benefits to millions of Americans with advanced degrees in upper-income households.

This might be the most costly executive action in history. It’s unacceptable that the President would implement it without offsets and without Congressional approval. Including these actions, the President has now added nearly $4.9 trillion to ten-year federal deficits through legislation and executive actions.

With inflation at a 40-year high and the national debt approaching record levels, we shouldn’t be adding to deficits – certainly not by executive fiat.

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For more information, please contact Kim McIntyre, Director of Media Relations, at mcintyre@crfb.org