President Biden’s plan to reduce student loans for millions of debt-saddled former students will cost $240 billion over the next decade, the White House insisted Friday — a figure notably less than other independent estimates.

“Our estimate is that the debt relief proposal will reduce average annual receipts in the student loan program by about $24 billion a year over the next ten years,” Bharat Ramamurti, Deputy Director of the White House National Economic Council, told reporters at a briefing Friday.

“That means we are not going to be collecting a certain amount of payments that we otherwise would have been collecting and that totals about $24 billion a year on average over the next ten years,” he said.

The figure is the first time the White House has attached a price tag to the effort it hopes will begin to make good on a campaign promise ahead of the midterm elections.

A group of graduating student wearing  caps.
The plan vows to forgive up to $10,000 for some student loan holders.
Getty Images/EyeEm

President Biden caused an uproar when he announced the debt giveaway Wednesday — despite experts warning the bailout would worsen America’s tenuous economic situation and unfairly disadvantage blue-collar workers.

Now the cost attached — $240 billion over ten years — curiously falls short of other independent estimates.

Earlier this week, the Penn Wharton Budget Model estimated that a one-time debt forgiveness program of $10,000 per borrower making under $125,000 annually would cost taxpayers around $300 billion, increasing to $329.7 million if the window is extended over the next 10 years.

Similarly, an assessment by the bipartisan Committee for a Responsible Federal Budget estimates the cost to be roughly $360 billion over the next decade.

The White House explained the some $100 billion discrepancy on a “preliminary estimate” that it assumes only 75% of those eligible will take advantage of the loan reduction — based on previous participation rates for smaller-scale federal student loan relief programs.

“We are hoping to get as close to 100% [participation] as possible,” he said. “But for the purposes of putting out a preliminary estimate on this we had to choose a number and we felt 75% was the most defensible.”

A more comprehensive — and likely higher — cost estimate is expected from the Office of Management and Budget in the coming weeks.

Should the $240 billion figure prove accurate, Ramamurti said it represents a mere 1.5% of the deficit reduction the budget is on track for this fiscal year.

“Practically speaking, compared to the previous year, $1.7 trillion more dollars are going into the treasury than are going out,” he said. “It is paid for — and far more — by the amount of deficit reduction that we’re already on track for this year.”

By comparison, the White House pointed to the more than $350 billion in PPP loans forgiven since last July.

Still, the plan has its detractors — including those in the President’s own party.

Democratic Rep. Tim Ryan — who is duking it out for a Senate seat from Ohio against Republican JD Vance — broke with his party and his own voting record this week when he said the plan sends the “wrong message” to Americans who ​decided against getting a degree and are already struggling to pay their bills.

Rep. Tim Ryan
Rep. Tim Ryan speaks to supporters on May 3.
Jay LaPrete/AP

“While there’s no doubt that a college education should be about opening opportunities, waiving debt for those already on a trajectory to financial security sends the wrong message to the millions of Ohioans without a degree working just as hard to make ends meet,” ​Ryan told the Columbus Dispatch. 

Similarly, Maine Democrat Jared Golden — who is defending his House seat in a tight race against former GOP Rep. Bruce Poliquin — spoke out against the plan.

“It is out of step with the needs and values of working-class Americans, and I do not support the president’s decision,” Golden told the Bangor Daily News.

Overall — including other smaller changes to student loans such as creating a new income-driven repayment plan and an extension of the moratorium on repayments — CRFB estimates that Biden’s agenda will wipe out more than half a trillion dollars in debt.



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