The Democrats who run Congress didn’t even ask for CBO’s estimate despite the huge claim on taxpayer dollars. They simply abdicated their power of the purse to the President. But the ranking Republicans on the House and Senate education committees inquired, and CBO director Phillip Swagel responded in a letter with the horrifying political math.
The cost of Mr. Biden’s unilateral extension of the moratorium on student loan payments for another three months through December will be $20 billion. But that’s a bargain compared to the $400 billion cost of canceling up to $10,000 in debt issued by June 30 this year, plus another $10,000 for recipients of Pell grants.
CBO says that doesn’t even count the cost of Mr. Biden’s steps to ease the terms on federal income-based repayment plans that are on top of the $10,000-$20,000 loan forgiveness. Independent analysts have estimated that cost at $150 billion or more, which would take the cost to $570 billion.
This is an unprecedented act of peacetime fiscal recklessness. Mr. Swagel says the foregone repayments will fall in 2023 alone by the equivalent of 0.08% of U.S. GDP and continue for 30 years, adding each year to the amount the Treasury will have to borrow to make up for lost interest and repayments of principal.