An updated report from Penn Wharton analyzing the fiscal impact of President Biden’s announced student loan forgiveness plan has increased its overall fiscal impact to $605 billion over ten years. Penn Wharton’s previous estimate was roughly $300 billion.
The analysis was updated to include the details included in the President’s announced plan, which include debt payment deferral and an income-based repayment regime that caps payments to 5% of eligible income for each borrower.
The updated study found that over 60% of all benefits from the plan would accrue to households in the top 60% of earners.
The White House has refused to place a price tag on the plan, saying that the ultimate cost would depend on “participation rates” from eligible beneficiaries. At the same time, the administration insists that the benefits of the program will outweigh the costs.
At a press briefing yesterday, White House Press Secretary Karine Jean-Pierre was asked “If you don’t know how much [student debt cancellation] is going to cost, how can you guarantee it’s going to be paid for?” She responded, “We’ll actually know more once people take us up on it and get a sense of if they will.”
Read the full Penn Wharton report here.
