The Department of Education's cost of Biden’s new student loan plan could be twice of what the administration reported according to a group of economists and data scientists at the University of Pennsylvania.
While Biden's initial debt forgiveness plan is stuck in legal gridlock, another plan has been introduced targeting reform of income-driven repayment plans, or IDRs, by lowering monthly costs based on the monthly student loan amount paid compared to income. The Department of Education estimated that the program would cost $138 billion over the next 10 years but according to experts at the University of Pennsylvania using the Penn Wharton Budget Model the cost is expected to be more than double that at $361 billion. The discrepancy is due to the Department of Education not considering potential borrowers switching from non-IDR plans into IDR plans due to the more enticing components of the new IDR plan.
The cost estimate of IDR reform is part of the debate surrounding the economic impact student debt forgiveness would have on the U.S. According to the National Taxpayers Union the average burden the U.S. taxpayer will face from Biden's proposed plan will be $2,503.22. To add perspective Bankrate's Annual Emergency Fund Report detailed that 68% of adults in the U.S. are worried they won't be able to cover the cost of living for just one month if they lost their primary source of income and 57% are currently unable to afford $1,000 in the event of an emergency. Republican challengers of student loan debt forgiveness have been leery of Democrats taking advantage of Biden's plan to push an economic agenda further increasing government dependence much like what Governor Kathy Hochul proposed in her "Achieving the New York Dream” plan.
The far-left Governor of New York is proposing a raise in the cost to attend public colleges and universities in wake of the student loan debt bailout. She is seeking a 3 percent tuition increase that will occur alongside a 6 percent in-state tuition increase each year for five years. These numbers are based on the Higher Education Price Index (HEPI), in which the inflation rates of several New York universities are measured by. Hochul signed a bill expanding access to federal student loan relief in September of 2022 and has expanded government programs for tuition assistance. Her latest tuition raise proposal aligns with the "cradle-to-grave" welfare model of raising costs and taxes to further government reliance. The Senate Republican Policy Committee explains:
"With their reckless tax and spending spree, Democrats are aiming to do more than burden Americans with higher taxes and more debt. They intend to transform our economy, imposing sweeping policies that will dramatically change how Americans interact with the federal government.
“Their scheme will increase Washington's control over Americans' lives, from health care to college choices to how they care for children and other loved ones. Democrats' new programs expand society's dependence on government all across the socioeconomic spectrum, failing to promote work on one end and providing lavish subsidies detached from financial need on the other. This is an unsustainable promise of benefits that the country cannot afford."
While the future of Biden's plan remains uncertain with its existence relying on the COVID-19 national emergency that will soon be ending in May, 16 million people have been approved to receive debt forgiveness. Student loan forgiveness played a role in 2022 midterm elections and appears to be an issue that will impact voters going into 2024.
Jayne Zirkle is a correspondent for War Room.
