US: White House says student loan forgiveness plan will cost $24 billion a year

This estimate assumes that 75% of those eligible take up the offer

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Photo: Reuters

By Reuters

Published: Fri 26 Aug 2022, 8:35 AM

A US plan announced this week to forgive $10,000 in student loans for millions of debt-saddled former college students, will cost roughly $24 billion a year, assuming that three quarters of those eligible take up the offer, the White House said.

The move — announced by President Joe Biden on Wednesday — kept a pledge he made in the 2020 campaign for the White House, and could boost support for his fellow Democrats in the November congressional elections.

Some economists said it may fuel inflation, while the Republicans mostly oppose student loan forgiveness, calling it unfair because it would disproportionately help people earning higher incomes.

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On Wednesday, the White House said it had yet to determine the price tag for the package but on Thursday, White House spokesperson Karine Jean-Pierre told CNN: "Assuming that 75 per cent of folks take us on on the President's student loan cancellation plan, and you look at the average cash flow on that, it's going to be about $24 billion per year."

American university tuition fees are substantially higher than in most other rich countries, and US consumers carry $1.75 trillion in student loan debt, most of it held by the federal government.

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Reuters

Published: Fri 26 Aug 2022, 8:35 AM

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