Biden's income-driven student loan repayment plan will cost taxpayers $230 billion
'President Biden is ramming through his retroactive free college agenda with complete disregard for the rule of law or faithful stewardship of taxpayer dollars,' Dr. Virginia Foxx told Campus Reform.
The conservative lawmakers argued that changes to the discretionary income cap for IDR payments, which went from 150% of the federal poverty guideline to 225%, will 'exacerbate rising college costs and excessive borrowing.'
If the Biden administration’s new income-driven student loan repayment (IDR) is adopted, taxpayers will assume an additional $230 billion, according to the Committee on Education and the Workforce’s (Committee) latest announcement.
That figure comes from the Congressional Budget Office (CBO), which sent a memo to Dr. Virginia Foxx (R-NC), Chairwoman of the Committee, who requested the data.
The details follow last month’s call by Foxx and more than 60 other Republicans for U.S. Department of Education (DOEd) Secretary Miguel Cardona to rescind “the Biden administration’s radical” IDR.
IDR belongs to the administration’s larger efforts to forgive student debt, a power that even Democratic lawmakers have claimed should be left to Congress.
As SCOTUS hears arguments on Biden's student loan vote buying scheme, it feels like a good day to replay this classic:
"People think the President of the United States has the power for debt forgiveness. He does not...that has to be an act of Congress."
—Nancy Pelosi (2021) pic.twitter.com/IWrrK9zpW2
— Charlie Kirk (@charliekirk11) February 28, 2023
The conservative lawmakers argued that changes to the discretionary income cap for IDR payments, which went from 150% of the federal poverty guideline to 225%, will “exacerbate rising college costs and excessive borrowing.”
An analysis by Nerdwallet explains IDR and the changes:
If your household income is $75,000 for a family of four in Virginia, your non-discretionary income is $45,000 and your discretionary income is $30,000, based on 2023 U.S. federal poverty guidelines. Payments under current IDR plans are a percentage of that $30,000. The new plan places the threshold for discretionary income at 225% of the federal poverty guideline. That same $75,000 household would see payments based on just $7,500 of discretionary income.
[RELATED: PROF. GIORDANO: Student Loan Forgiveness, HEROES Act: How President Biden Undermines His Own Argument]
The Jan. 10 changes make this plan the most generous loan plan in U.S. history, with some borrowers projected to pay $0 in monthly payments towards their loans, according to the nerdy analysis.
In last month’s letter to Cardona, the conservative lawmakers wrote that the “proposed regulation… would turn a safety-net for low-income federal student loan borrowers into an unsustainable transfer of wealth from hardworking taxpayers to college-educated individuals.”
The CBO’s findings confirm the Committee’s earlier concerns.
“The cost of outstanding loans would rise by $76 billion, which would be recorded as an increase in the deficit in 2023, the year in which the terms of those loans would be modified,” the CBO’s analysis reads. It also confirms that over the next ten years, new loans are expected to add $154 billion to the Treasury deficit.
Though the CBO noted new IDR changes would increase the deficit, a DOEd spokesperson told Campus Reform that the plan is “responsible.”
“The Department’s proposed Income-Driven Repayment plan is a responsible change to support borrowers' progress toward forgiveness and will grow our economy by giving them a better shot at buying a home, saving for retirement, or starting a business,” said the spokesperson. “The proposed plan would cut monthly payments in half for undergraduate borrowers from low- and middle-income families all while the Biden-Harris Administration is reducing the deficit at record levels.”
“The same can’t be said for Republican officials who racked up the deficit through a $2 trillion tax giveaway for the ultra-wealthy,” the spokesperson concluded.
[RELATED: More than 100 Republicans file amicus brief arguing student debt forgiveness is unconstitutional]
Dr. Foxx, however, would not call the IDR changes responsible.
“President Biden is ramming through his retroactive free college agenda with complete disregard for the rule of law or faithful stewardship of taxpayer dollars. Just this week, the Congressional Budget Office’s score of the President’s Income-Driven Repayment proposal far exceeded his own administration’s estimates,” Dr. Foxx told Campus Reform.
“Simply put, the administration’s proposal is plan B for when the Supreme Court inevitably strikes down his student loan bailout. As the institution that holds the power of the purse, Congress has the responsibility to protect the interests of taxpayers. I urge President Biden to stop undermining congressional authority with his illegal tactics and work with us on commonsense legislation to reform the federal student loan system and lower the cost of college for students and families.”
Campus Reform continues to track and report on updates related to IDR and Biden’s student loan forgiveness program.
Follow Jared Gould on Twitter.