‘Consequences for taxpayers’: Here is how much President Biden’s student loan forgiveness plan could cost you. (Hint: It’s in the thousands.)

‘Results for taxpayers’: Here’s how much President Biden’s student loan forgiveness plan could cost you. (Hint: it’s in the thousands.)

If you’re burdened with student loan debt, there’s some good news for President Joe Biden.

On Wednesday, Biden announced a considerable student loan forgiveness plan. For borrowers who make less than $125,000 per year, or for households earning less than $250,000, their administration will cancel federal student loan debt of up to $10,000 per person.

For low-income students who borrow money under the Pell Grant program, the Biden administration will forgive up to $20,000 of federal student loan debt per person.

President Biden wrote in a tweet on Wednesday, “In keeping with my campaign promise, my administration is announcing a plan to give working and middle class families breathing space as they enter federal students in January 2023.” Preparing to resume loan payments.”

Of course, you can’t just wipe out “magical” debt.

don’t miss

how much would it cost?

According to the University of Pennsylvania’s Wharton budget model, a one-time maximum loan forgiveness of $10,000 per borrower — for those earning $125,000 or less per year — would cost $329.1 billion in the 10-year budget window.

The study found that in this model scenario, 69% to 73% of the loan waivers would go to households in the top 60% of the income distribution in the US.

The National Taxpayers Union Foundation also reduced some numbers. Based on a total of less than 158 million taxpayers in the US in 2019, the foundation says the plan will cost $2,085.59 per taxpayer.

“There is a transfer of money from society at large at this point in time for people who borrow to go to college,” says Andrew Lutz, director of federal policy at the National Taxpayers Union. “It has consequences for consumers. It impacts taxpayers.”

Keep in mind that these estimates are based on a model of $10,000 in forgiveness and do not include Biden’s $20,000 forgiveness for Pell Grant borrowers. If you consider the latter, the burden for the taxpayers will increase further.

“This would increase the cost or budget impact of the policy overall,” Lutz says.

concern for fairness

The plan also raises questions about fairness: You have to go to college to get student loans in the first place, and not everyone is lucky enough to go to college.

One of the critics is Rep. Tim Ryan, the Democratic nominee for the US Senate in Ohio.

“Forgiving debt for those already on a trajectory to financial security sends the wrong message to the millions of Ohioans who work hard enough to work without a degree,” Ryan said in a statement.

“Instead of forgiving student loans for those who earn six points, we must work to level the playing field for all Americans.”

now what?

Debt is a big problem for Americans — and the Fed’s harsh stance doesn’t help.

The US central bank is aggressively raising interest rates to control rising inflation. For borrowers, this means increasing payments.

While Biden’s student loan forgiveness may help ease the burden for some, it comes at a cost for taxpayers and won’t solve the debt problem for everyone.

Solution? Work as hard as you can, save as much as you can and be as frugal as possible. that’s it Helped people survive the 1980s A decade characterized by multiple recessions and double-digit interest rates.

what to read next

This article provides information only and should not be taken as advice. It is provided without warranty of any kind.

https://finance.yahoo.com/news/consequences-taxpayers-much-president-biden-165000406.html

Leave a Comment