Many student borrowers get into trouble because they don’t understand basic financial management. Neither do the Biden officials who claim the President’s student loan cancellation is fully paid for by this year’s decline in the federal budget deficit.
The Penn Wharton Budget Model estimates that the President’s student loan relief could cost as much as $1 trillion. The White House is cagey about the cost, and says it doesn’t matter anyway since the federal deficit is on track to fall by about $1.7 trillion this fiscal year from last year’s $2.7 trillion, which was the second largest in history after 2020.
Bharat Ramamurti, deputy director of the White House National Economic Council, recently explained: “This is paid for. It is paid for and far more by the amount of deficit reduction that we’re already on track for this year,” adding that “compared to the previous year, 1.7 trillion more dollars are coming into the Treasury than are going out.”