Ivy League Analysis Finds Biden Student Loan Giveaway Could Cost Taxpayers Over $1 Trillion

Joe Biden’s student loan debt giveaway could cost American taxpayers more than $1 trillion dollars, according to an Ivy League analysis.

The Penn Wharton Budget Model report published by the University of Pennsylvania on Friday found that debt cancellation will cost up to $519 billion and the forbearance in place will run up another $16 billion. However, additional details in the Biden plan and resulting changes in economic behavior are expected to put the total cost above $1 trillion.

A major part of the future costs is expected to come as part of Biden’s plan for “income-driven repayment” (IDR) that is expected to include details that have not yet been made public. The report provides that the IDR program could add more than $450 billion to the costs, “depending on future details of the actual IDR program and concomitant behavioral changes.”

The study predicts that many borrowers will be incentivized to take out more student loans in future years to take advantage of the 5% repayment threshold included in Biden’s plan. By capping the exposure to future repayment, the plan is expected to lead to increased borrowing, which will in turn inevitably lead to continuing increases in college tuition and expenses.

The Penn Wharton estimate is even greater than the findings of the conservative National Taxpayers Union Foundation. That group’s analysis found that the debt write-off will cost the average U.S. taxpayer more than $2,000.

It also said that student debt cancellation will cost even more money than the so-called “Inflation Reduction Act” recently signed into law. The cancellation of student debt meanwhile does “nothing to address the underlying causes of education costs.”

Many economists have said the plan will make the inflation hammering the U.S. economy worse. Even former Obama economic advisor Jason Furman has called the program “reckless” and said it amounts to “pouring gasoline on the inflationary fire that is already burning.”

A poll published this week by liberal CNBC found that nearly 60% of Americans are concerned that the debt cancellation will make inflation worse.

Biden has been sharply criticized by lawmakers from both sides of the aisle for using a law designed to help veterans to wipe out the debt of all borrowers. Rep. Mike Waltz (R-FL), a U.S. Army colonel, said that Biden’s debt cancellation is a “slap in the face to veterans.” Rep. Jared Golden (D-ME) said that the plan is “out of step” with the values of ordinary working-class Americans.