President Joe Biden suggested a change to the income-driven repayment (IDR) scheme for a student loan in January that would have cost taxpayers $138 billion over ten years.
Nevertheless, the Congressional Budget Office (CBO) recently released a revised assessment estimating that the modification would cost at least $230 billion.
New Student Loan Program Implementation
In January, President Biden made a tweak to the income-driven repayment (IDR) plan for student loans that the taxpayers would have had to pay for over a ten-year period.
But a new estimate from the Congressional Budget Office (CBO) indicates that the adjustment would cost at least $230 billion.
- More borrowers taking advantage of the plan
- Colleges raising fees to take advantage of demand
- Delinquent debtors are automatically enrolled in the program by the government.
If the Supreme Court rejects Biden’s proposal to cancel up to $20,000 in student loan debt for each borrower, taxpayers may probably anticipate an even higher payment over the following ten years.
The CBO estimates an extra $46 billion in program expenses in this situation, bringing the total to $276 billion. This is due to the fact that customers will swarm to the plan as their second-best choice.
The lowest-earning borrowers would benefit from an 83% decrease in lifetime payments per dollar borrowed if the proposed IDR plan—which would replace the present REPAYE plan—is implemented. Parent PLUS loan borrowers are not now qualified for the new program.
Read more: Student loan interest deduction: How much is deductible?
Republicans Block Biden Administration’s Plan
The Biden administration’s federal student loan forgiveness proposal has some Republican senators so impatient to repeal it that they are unwilling to even wait for the U.S. Supreme Court to rule on the matter.
GOP senators had preparations to launch a Congressional Review Act (CRA) resolution last week in yet another effort to block the implementation of the forgiveness proposal.
The plan, which was introduced last summer with the objective of forgiving up to $20,000 in federal student loan debt per borrower, has already been the target of multiple lawsuits that seek to block it.
The CRA allows Congress to review new regulations created by government agencies and to reverse them with a majority vote.
Sen. Bill Cassidy (R-La. ), ranking member of the Health, Education, Labor and Pensions Committee, and Senators. John Cornyn (R-Texas) and Joni Ernst are leading the campaign to utilize the CRA to block Biden’s plan (R-Iowa.).
Following a report from the Government Accountability Office declaring that student loan relief and payment pauses are subject to the CRA, the resolution was put out.
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