President Joe Biden's student loan relief plan, announced Wednesday, may cost around $600 billion dollars and, if changes are made to the program, that number could increase as high as $1 trillion, a study released Friday said. File Photo by Jim Ruymen/UPI | License Photo
Aug. 26 (UPI) -- Researchers at the University of Pennsylvania's Wharton School of Business said Friday that President Joe Biden's student loan cancellation program would cost just over $600 billion over the next ten years.
The study found that, under strict static assumptions, the total plan would cost $605 billion, with 75% of the benefits going to households that make $88,000 or less.
However, if some future changes are made to the program, the total price tag could reach $1 trillion.
Biden announced his long awaited plan to tackle student loan debt on Wednesday, cancelling up to $20,000 of debt for those who received Pell Grants.
The president's plan includes $10,000 in loan forgiveness for borrowers who earn less than $125,000 annually and did not receive Pell Grants.
The plan also extends the pause on federal student loan payments to Dec. 31, and allows undergraduate debt holders to cap repayment at 5% of their monthly income.
The plan will fully cancel student debt for 20 million people, Biden said in his announcement Wednesday.
"That's 20 million people who can start getting on with their lives," Biden said. "All this means that people can finally start to crawl out from under that mountain of debt."
Some progressive Democrats have called for more debt to be canceled, with the NAACP pressing the administration to cancel up to $50,000 per borrower, citing higher loan burdens on Black Americans.
Friday's study also noted that part of the plan's benefits could be offset if colleges increase tuition prices or reduce needs-based benefits.