The Biden Administration recently announced a new plan to cancel student debt for up to 30 million borrowers and released a preliminary rule this morning detailing parts of this plan.
Cancel debt of those who attended low-financial-value programs, including those that failed accountability measures or were deemed ineligible for federal student aid programs.
The Department of Education has estimated the first four components of the plan would cost $147 billion over a decade, with half the cost stemming from the cancellation of accumulated interest.
Importantly, over $150 billion of debt is currently in default.
While the default provision would be limited to the next two years under the most recent draft of the proposal, the hardship component has no time limit and thus opens a new venue for a future administration to cancel large amounts of student loan debt.
In total, our $250 billion to $750 billion estimate for the total cost of the plan would be in line with the cost of the Administration's $400 billion blanket debt cancellation, which was ruled illegal by the Supreme Court.
These analyses will be available at our student debt cancellation resources page.
https://www.crfb.org/blogs/student-debt-plan-would-add-hundreds-billions-deficit
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