{"id":396,"date":"2023-02-10T23:21:44","date_gmt":"2023-02-10T23:21:44","guid":{"rendered":"https:\/\/edenreports.com\/?p=396"},"modified":"2023-02-10T23:21:44","modified_gmt":"2023-02-10T23:21:44","slug":"cost-of-bidens-new-student-loan-plan-exceeds-361-billion-double-what-the-administration-projected","status":"publish","type":"post","link":"https:\/\/edenreports.com\/index.php\/2023\/02\/10\/cost-of-bidens-new-student-loan-plan-exceeds-361-billion-double-what-the-administration-projected\/","title":{"rendered":"Cost of Biden’s New Student Loan Plan Exceeds $361 Billion – Double What the Administration Projected"},"content":{"rendered":"\n

The Biden administration’s plan<\/a> to tackle student debt may cost twice as much as estimated, per a new analysis<\/a>.<\/p>\n\n\n\n

This comes as the main debt-relief initiative, forgiving up to $20,000 per borrower, faces legal uncertainty<\/a>.<\/p>\n\n\n\n

The Biden administration’s alternative approach<\/a>, Plan B, prioritizes the overhaul of income-driven repayment plans (IDRs) that determine an individual’s monthly student loan payment based on their earnings.<\/p>\n\n\n\n

The concept<\/a> behind IDRs is to reduce monthly payments, however, they have encountered numerous challenges such as complex regulations and the occurrence of “negative amortization,” resulting in a borrower’s debt balance growing even when making monthly payments.<\/p>\n\n\n\n

The estimated cost<\/a> of Biden’s IDR reform initiative, as predicted by the Penn Wharton Budget Model, a team of economists and data scientists at the University of Pennsylvania, could reach up to $361 billion<\/a> over a decade. This amount is significantly higher than the projected cost<\/a> of $138 billion by the U.S. Department of Education for the next ten years.<\/p>\n\n\n\n

The discrepancy in the estimates<\/a> stems from divergent views on enrollment in the newly introduced IDR program. While the Biden administration predicts steady enrollment, the economists at Penn-Wharton anticipate a significant increase, projecting the IDR plan to grow from roughly 33% to potentially 75% of all eligible student loans.<\/p>\n\n\n\n

The analysis<\/a> pointed out that the Education Department’s estimate failed to take into account the possibility of borrowers switching from non-IDR plans to IDR plans because of the more attractive features of the new IDR plan.<\/p>\n\n\n\n

The cost projections for the IDR reform plan are separate from the potential expense of the government canceling federal student loans, which is currently facing a Supreme Court case this year. As per the previous analysis<\/a> by Penn-Wharton, the latter initiative alone could cost the government a minimum of $469 billion over the next ten years.<\/p>\n","protected":false},"excerpt":{"rendered":"

The Biden administration’s plan to tackle student debt may cost twice as much as estimated, per a new analysis. This comes as the main debt-relief initiative, forgiving up to $20,000 per borrower, faces legal uncertainty. The Biden administration’s alternative approach, Plan B, prioritizes the overhaul of income-driven repayment plans (IDRs) that determine an individual’s monthly student loan payment based on […]<\/p>\n","protected":false},"author":1,"featured_media":397,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[218,9,202,50,192,91],"tags":[229,231,16,156,213,66,215,367,214],"_links":{"self":[{"href":"https:\/\/edenreports.com\/index.php\/wp-json\/wp\/v2\/posts\/396"}],"collection":[{"href":"https:\/\/edenreports.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/edenreports.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/edenreports.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/edenreports.com\/index.php\/wp-json\/wp\/v2\/comments?post=396"}],"version-history":[{"count":1,"href":"https:\/\/edenreports.com\/index.php\/wp-json\/wp\/v2\/posts\/396\/revisions"}],"predecessor-version":[{"id":398,"href":"https:\/\/edenreports.com\/index.php\/wp-json\/wp\/v2\/posts\/396\/revisions\/398"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/edenreports.com\/index.php\/wp-json\/wp\/v2\/media\/397"}],"wp:attachment":[{"href":"https:\/\/edenreports.com\/index.php\/wp-json\/wp\/v2\/media?parent=396"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/edenreports.com\/index.php\/wp-json\/wp\/v2\/categories?post=396"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/edenreports.com\/index.php\/wp-json\/wp\/v2\/tags?post=396"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}