Even after the FOURTH day, the White House refused to say who will pay Biden’s $500,000,000,000 student loan
The White House is silent on how it intends to pay for President Biden’s decision to write off $10,000-$20,000 in student debt for some Americans, or whether future tax increases will be needed to cover the proposal that some estimates more or more cost $500 billion.
Although the policy was announced earlier this week, administration officials have yet to clarify how the proposal will pay off in the long term. As the current plan calls for the government to add to the existing US debt of nearly $31 trillion.
The White House did not respond to the question, nor did it consider future tax increases to offset Biden’s student loans.
Biden on Wednesday announced plans to forgive $10,000 in student debt for borrowers earning less than $125,000 a year.
Government officials have argued in recent days that the national government deficit is already shrinking under Biden’s watch, although they have not addressed how the additional spending will be offset.
“Indeed, we’ve achieved a $350 billion deficit reduction, and this year we’re projecting a $1.7 trillion deficit reduction by the end of the fiscal year,” said Karine Jean, White House press secretary, -Pierre in the White House daily Instruction.
Administrative officials also claimed that the cost of Biden’s student loans could not be fully accounted for because it was unclear how many borrowers would take up the opportunity. They say it’s still unclear how many people would have paid off their loans in full over time anyway.
“In terms of cost, all of this will also depend on how many of the canceled loans should actually be repaid,” said Jean-Pierre.
However, the National Taxpayers Union Foundation disagrees. The group released an analysis earlier this week estimating that if student loan disbursements add nearly $330 billion to the deficit over the next decade, according to a budget model from the University of Pennsylvania’s Wharton School of Business, the average cost per taxpayer will be $2,085. But that might be on the low end. The Committee for a Responsible Budget estimates the cost of the brochures to be between $440 billion and $600 billion.
In particular, the fiscally conservative think tank says the federal government will need to find a way to offset loan forgiveness going forward, either through spending cuts or tax hikes. Much of this, the group predicts, will be through the latter.
Disaggregated, the data showed that the total was significantly higher for the highest income brackets, but still applied to the middle class.
For example, taxpayers earning between $1 and $50,000 per year would pay upwards of $158, depending on the group. The cost for those earning between $50,000 and $75,000 is estimated at $866 and $1,477 for those earning between $75,000 and $100,000, while those earning between $100,000 and $200,000 Earning dollars would face costs in excess of $3,150. Employees reducing $200,000 to $500,000 would pay almost $9,950.
“Some may question whether taxpayers will bear the cost of paying off student debt. But the $329 billion cost of student debt relief would be $329 billion previously borrowed from the federal government and not repaid to the Treasury,” the organization’s analysis reads. “Policymakers will need to make up this gap in the future by cutting government spending, raising taxes, increasing credit, or a combination of these.
Biden on Wednesday announced plans to forgive $10,000 in student debt for borrowers earning less than $125,000 a year. Pell Grant recipients receive $20,000 in debt as long as their income is below the $125,000 threshold. Administration officials say no person or household in the top 5% of earners will benefit from the decision.
The White House is also extending a pause in student loan payments through the end of the year. Coinciding with the announcement is a new Proposition
from the Department of Education, which would allow borrowers to limit college loan payments to 5% of their monthly income, increasing the cost to taxpayers of the handout.
Penn Wharton’s budget model estimates that the total cost of the proposal, allowing for loan forbearance and the new repayment limit, could be more than $1 billion.