July 21, 2023

Another Disastrous Biden Policy Would Add $475 Billion to the Debt

After the U.S. Supreme Court ruled that President Biden’s primary student loan bailout scheme was unconstitutional, the President used his pen to drastically expand another repayment cancelation rule that has been pending since 2022, quickly finalizing it in the wake of the court's rebuke.  This rule, known as the Income Driven Repayment program sets student loan payment rates for some borrowers based on their income. Under this new scheme, the amount that borrowers have to pay is lowered and the timeline is cut in half.
A new analysis finds that by doing so, Biden will be adding over $475 billion to the national debt over the next decade. 
Biden’s Rulemaking, Explained: 
Despite losing at the courts, and after Congress passed multiple measures to stop Biden’s student loan schemes, the President is still trying to find any way possible to cancel debt for well-off college graduates. 
One rule the Biden Administration finalized in the wake of the court ruling made drastic changes to the Income-Driven Repayment program—a program that sets student loan payment rates for some borrowers to be determined by their income. Under Biden’s policy, the amount that borrowers have to pay is lowered and the timeline is cut in half. 
The Economic Consequences: 
This stroke of the pen by the President is set to cost nearly $475 billion over the next ten years, according to the Penn Wharton Budget Model
Here is what is driving that price tag, according to Penn Wharton: 

  1. Future Borrowers Will Never Have to Pay: “About 6.6 percent of future borrowers will never make a payment,” Penn Wharton predicts. 
  2. Over 60 Percent of Borrowers Will Only Have to Pay Part of their Loans: “Among all federal student loan borrowers, 24.6 percent of them fully repay their loans, which accounts for 37.6 percent of the predicted loan disbursement. Therefore, about 62.4 percent of the predicted loan amount disbursed is projected to not be fully repaid,” Penn Wharton finds. 

Worst yet, this rule from the White House could cost $96 billion more than the President’s original student loan bailout plan, which would have cancelled up to $20,000 in debt for millions of Americans on the backs of taxpayers who did not go to college or already paid off their loans. 
The Bottom Line: This is yet another example of the Biden Administration going against the will of the Congress to spend recklessly. These failed economic policies will continue to drive our debt and keep our country on an unsustainable fiscal trajectory. House Republicans will continue our work to hold this President accountable for these wasteful, woke, and bloated spending sprees.