The estimate by the nonpartisan Congressional Budget Office gauged the cost over 30 years, though the bulk of the effects to the economy would be felt over the next decade. President Biden’s plan to erase significant amounts of student loan debt for tens of millions of Americans could cost about $400 billion, the nonpartisan Congressional Budget Office said in a report Monday, making it one of the costliest programs in the president’s agenda.
The C.B.O. said the price tag might rise even higher because of Mr. Biden’s decision to extend a pause on federal student loan repayments through the end of the year, which could end up costing some $20 billion. The report gauged the cost over a period of 30 years, though the bulk of the effects to the economy would be felt over the next decade.
Although the office called the figures “uncertain,” they are generally in line with those that economists put forth after Mr. Biden announced the program in August. The report is certain to revive the political debate over student loan forgiveness just weeks before the midterm elections. Critics have cast the plan as a costly giveaway that could exacerbate inflation, while the administration argues that it will help millions of low- and middle-income Americans get their footing in a volatile economy.
Mr. Biden’s plan cancels $10,000 in debt for those earning less than $125,000 per year and $20,000 for those who had received Pell grants for low-income families. In its report, the C.B.O. said that of the 37 million borrowers with direct loans from the federal government, 90 percent who are eligible could be expected to take advantage of debt forgiveness once it becomes available. (White House officials have suggested that a far smaller share of eligible borrowers are likely to opt into the program than the budget office predicts, which would reduce its cost.)