Penn Wharton: Biden’s Loan Forgiveness Could Cost in Excess of $1 Trillion

Just the News: The largest potential cost-driver Penn Wharton identified is the Biden administration’s new income-driven repayment plan, which includes capping monthly student loan payments at 5% of a borrower’s discretionary income and reforming the repayment guidelines to guarantee that no borrower who makes “about the annual equivalent of a $15 minimum wage” will have to make monthly loan payments. Debt cancellation alone will cost the United States up to $519 billion, Wharton found in an analysis published Friday. Loan forbearance, which allows borrowers to temporarily stop paying, will cost an estimated $16 billion. The income-driven repayment plan will initially cost $70 billion, however, specific details have yet to be released and the price may be significantly higher (Just the News). 

Daily Mail: Joe Biden was warned by the Treasury Secretary and his wife not to cancel student debt, but pressed ahead regardless on the urging of Kamala Harris, it has been claimed. Treasury Secretary Janet Yellen argued that with inflation around a 40-year high, the cancellation of student loans could free up consumer spending and drive inflation higher (Daily Mail).