Biden's student loan forgiveness plan: Who it helps, who it doesn't

Biden's student loan forgiveness plan: Who it helps, who it doesn't

August 28, 2022

(CNN)President Joe Biden’s student loan forgiveness plan could cost about $24 billion per year, White House press secretary Karine Jean-Pierre told CNN Thursday evening.

“Assuming that 75% of folks who take this on, the President’s student loan cancellation plan, and you look at the average monetary, cash flow on that, it’s going to be about $24 billion per year,” she said on “Don Lemon Tonight.”
Pushed by Lemon on whether the White House will release a detailed cost estimate, Jean-Pierre said that they will share more details once they see how many Americans take advantage of the plan.

    The White House had struggled for a second straight day to answer questions about Biden’s plan, simultaneously claiming that the President waited for the plan to be “fiscally balanced” before unveiling it and that there was no way to know how much the plan would cost.

      At a news briefing earlier Thursday, Jean-Pierre continued to insist that the plan to cancel thousands of dollars in federal student loan debt for millions of Americans would “be fully paid for because of the work that this President has done with the economy.”

      Asked specifically if the administration had a better idea about the total price tag for the program, Jean-Pierre began her answer by saying “the President’s record on fiscal responsibility is second to none” before detailing a list of his economic accomplishments. But she did not provide an estimate on how much the plan could cost during the briefing.
      “All of this when it comes to cost will also depend on how many of the loans canceled were actually expected to be repaid, it will depend on how many borrowers actually take up this opportunity before we have a real sense,” she said.

        Throughout the briefing, the press secretary was pressed on the numbers. She claimed the administration didn’t believe the move would increase the deficit, because of “the $1.7 trillion … we’ve done the work right to lower the deficit” — referring to an administration projection of how much the federal deficit will shrink in fiscal year 2022 — and the “$50 billion per year is going to go back” to the Treasury once student loan repayments start in December.
        She claimed the Treasury “was getting zero for the last two years,” as repayments were paused, but on Wednesday Deputy Director of the National Economic Council Bharat Ramamurti said that about $2 billion per month is still being repaid by borrowers during the pause, compared to $6 billion per month normally.
        The White House offered a more pointed defense of its student loan cancellation plan on Twitter, calling out GOP critics who have had Paycheck Protection Program loans forgiven.
        “Congresswoman Marjorie Taylor Greene had $183,504 in PPP loans forgiven,” one White House tweet said in response to the Georgia Republican’s criticism of Biden’s plan. “Congressman Matt Gaetz had $482,321 in PPP loans forgiven,” another read in response to similar complaints from the Florida lawmaker.
        The White House tweeted similar responses to criticism from GOP Reps. Mike Kelly of Pennsylvania, Vern Buchanan of Florida and Markwayne Mullin and Kevin Hern of Oklahoma.
        Asked Thursday if the administration would eventually release a cost estimate, Jean-Pierre said the “Department of Education is going to take the lead.”
        Asked why the President waited to so long to make his decision to cancel the debt, she said Biden “wanted to do it in a fiscally balanced way. And there was that legal review. … We wanted to make sure the legal review was done.”
        But pressed on how it could be fiscally responsible with no public cost estimate and no specifics on how the plan would be paid for or who would pay for it, Jean-Pierre insisted the administration does “not see this as irresponsible.”
        “We do not see this as irresponsible,” she said. “We see this as a fiscally responsible, balanced approach to doing this. I remember people have said, ‘Why don’t you do $50,000?’ We don’t want to do that because we want to make sure that we do this in a fiscally responsible way. Again, not pleasing everyone, but making sure that we keep that promise, but also do it in a smart, fiscally responsible way.”
        Ramamurti had offered more explanation to CNN’s Phil Mattingly on Wednesday in the difficulty in providing a top-line number.
        He said without knowing how many borrowers sign up, it would be difficult to know the total cost. “That plays a big role in what the cost is going to be,” he said.

          But beyond that, he said other factors made providing a firm number difficult. He said there are differing estimates of default rates, which would affect the total figure. He added that providing relief would also bring in additional tax revenue if those benefiting start small businesses or purchase homes.
          This story has been updated with additional information Thursday.
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