DENVER, Colo. — Many borrowers are excited about President Biden's student loan forgiveness program, but now, there's a question of how much this will cost the country and who is going to pay for it.
The cost of this program will likely fall on the backs of taxpayers, and one group of researchers found the student loan forgiveness program could cost about $2,500 per taxpayer.
“What we are saying is that this plan has costs that the Biden administration has not proposed a way to pay for the debt cancellation policy,” said Andrew Lautz, the director of federal policy for the conservative-leaning National Taxpayers Union Foundation.
His organization calculated that with an estimated $400 billion cost for the forgiveness program based on the number of people with student loans, divided by the number of American taxpayers (around 158 million people), the average cost for the program would be $2,500 per taxpayer.
“No, your taxes are not going up as a result of this policy,” said Lautz.
But increased taxes in the future is still a possibility. The government could also decrease spending or increase the national debt.
“It's hard to predict what Congress is going to do to address the debt in the future. But the longer we kick the can down the road, the more painful either the spending cuts or the tax increases are going to be,” said Lautz.
Beverly Moran, professor emerita of law at Vanderbilt University, views the issue differently. She said this is a cost our nation should help with.
“I think that all of us should be grateful for it, because what's the alternative? I mean, to have 45 million people who are in some sort of debt-serfdom, you know, debt servitude, because we made mistakes in our education policy? That….that can't be right,” said Moran.
She argues the program might help people who were never going to pay off their loans start doing so.
“If somebody owes $14,000 and that looks impossible to them, and now they are owing $4,000, that they might pay that $4,000 when they would have never paid the $14,000,” said Moran.
She acknowledged this forgiveness plan has high costs and is frustrated that it doesn't help fix the bigger issue of how expensive higher education has become.
“What we need to be discussing much more is how our federal policy led us to this moment,” said Moran. “Is this the right way to fund higher education by having higher and higher tuitions that are then covered by federal loans?”
Lautz agreed with Moran on the forgiveness program not addressing the biggest issue at hand. He said the cost of this program could be far higher for our country if the policy around higher education doesn't change soon.
“We worry that, that this debt cancellation policy is actually going to embolden colleges to further increase their tuition and fees,” said Lautz. “Without underlying reforms to the cost of college, this is actually going to make the problem worse for future generations of students.”
If you would like to take a look at the National Taxpayers Union cost analysis, click HERE.