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Tipsheet

New Penn Wharton Model Shows the True and Insane Cost of Biden’s Loan Bailout

(AP Photo/Evan Vucci)

New analysis shows estimates predicting President Joe Biden's student loan bailout will cost taxpayers $300 billion are grossly underestimated. 

According to the University of Pennsylvania Penn Wharton business school, the reallocation of student debt payments from wealthy degree holders to the working class could cost up to $1 trillion. 

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"President Biden’s new student loan forgiveness plan includes three major components. We estimate that debt cancellation alone will cost up to $519 billion, with about 75% of the benefit accruing to households making $88,000 or less. Loan forbearance will cost another $16 billion. The new income-driven repayment (IDR) program would cost another $70 billion, increasing the total plan cost to $605 billion under strict “static” assumptions. However, depending on future IDR program details to be released and potential behavioral (i.e., “non-static”) changes, total plan costs could exceed $1 trillion," Penn Wharton released Friday morning. 

The White House has not conducted an official assessment about how much Biden's bailout will cost but officials continue to insist the move is "fiscally responsible" and won't add to inflation. 

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Economic experts, including Democrats, disagree. 

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