President Joe Biden’s plan to provide relief for student loan borrowers will cost about $24 billion per year, the White House now says, a figure markedly lower than other private estimates.
White House press secretary Karine Jean-Pierre offered up the new figure on CNN Thursday night, after facing repeated questions about the cost of the plan in briefings.
The administration is calculating the cost based on revenue it will no longer collect on loans canceled under the program. Its calculation assumes that only 75% of eligible applicants will apply for the program, and considers other factors — like students who might default and stop paying their loans.
Over a 10-year period, that would mean Biden’s forgiveness program costs the government $240 billion in lost revenue. Administration officials have said the figure would likely be blunted by tax revenue on other economic activity — like home purchases — that Americans freed from paying debt would pursue.
Bharat Ramamurti, the deputy director of the National Economic Council, said Friday at a briefing that White House officials “consider it fully paid for” because the federal government’s annual budget deficit has declined under Biden.
Private estimates put the cost of Biden’s relief plan far higher.