According to the Penn Wharton Budget Model, President Biden’s new plan to have income based repayment for student loans will cost the American taxpayer more than $475 billion over 10 years, which is billions more than the original plan purposed by the administration last year which the Supreme Court decided was unconstitutional.
Biden’s new idea is called the Saving on a Valuable Education (SAVE) plan, which would intend to cover a little more than half of the debt that borrowers owe totaling $1.64 trillion and would leave the rest to the taxpayer.
The model estimates that Biden’s income based repayment plan would approximately cost $390.9 billion on the low end and could soar as high as $558.8 billion.
Penn Wharton junior economist Penlei Chen stated, “Due to the increased generosity of the newly proposed IDR plan, future student borrowers have the incentive to increase their federal student loan borrowing.”
As of July 1, 2024, the SAVE plan would go into effect where monthly payments could be cut in half for those making minimum wage and forgive all outstanding debts for students who borrowed less than $12,000 after 10 years of making payments.
The Biden administration claims most community college students who borrowed money would end up not having to pay back the full amounts.
According to the nonpartisan Urban Institute study, that leaves just a quarter of all bachelor degree recipients having to pay back the loans in full that they borrowed.
“Make no mistake, Biden’s newest student loan scheme only transfers the burden from those who willingly took out loans to Americans who never attended college or who already fulfilled their commitment to pay off their loans,” said Sen. Bill Cassidy (R-La.) and called the income-driven repayment rule absolutely “irresponsible” and “unfair” to the overwhelming majority of Americans.
The Supreme Court recently ruled on Biden’s debt forgiveness plan in a 6-3 decision because it was unconstitutional for Biden to write off the debt without congressional consent. How is this new plan any different and is there any fiscal responsibility left in America?