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Plan to cancel student debt could cost taxpayers $250 billion to $750 billion

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President Joe Biden’s plans to cancel student debt for some borrowers could cost U.S. taxpayers $250 billion to $750 billion, according to a new estimate.

The Committee for a Responsible Federal Budget, a nonpartisan budget group, said that depends on how the rules are crafted. The Penn Wharton Budget Model previously estimated the cost at $84 billion.

Biden’s plan includes five main components, but the costs depend on the details.

“In total, our $250 billion to $750 billion estimate for the total cost of the plan would be in line with the cost of the Administration’s $400 billion blanket debt cancellation, which was ruled illegal by the Supreme Court,” according to the CRFB analysis. “It would be on top of more than $600 billion of debt cancellation already enacted through unilateral executive action. As we have shown before, these policies would put upward pressure on inflation and interest rates by supporting stronger demand, and much of the benefits would accrue to high-income and highly-educated Americans.”

Just how far Biden’s plan will go and how much it will cost taxpayers remain to be seen. Some states have already filed a legal challenge to Biden’s latest executive effort to forgive a portion of Americans’ student loan debt.

The debt forgiveness would be enacted through a proposed federal rule, which means it has a lengthy process ahead and could be overturned if Republicans win in November.

The plan would cancel as much as $20,000 in interest for individual borrowers whose interest on unpaid debt has continued to grow over time, regardless of income. It would help those with undergraduate debt who have been paying for more than 20 years and graduate debt paid for more than 25 years.

Those components come alongside several other forgiveness efforts designed for specific federal programs.