Education Department: Student loan forgiveness could cost $305B over 10 years

Oct. 5 (UPI) -- The Department of Education said Wednesday that President Joe Biden's order to cancel student loan debt for millions of Americans could cost an average of $30 billion per year over the next decade.

The program, the department said, will cost roughly $305 billion over 10 years, while the Congressional Budget Office has estimated that the plan will cost about $400 billion over 30 years.

Biden announced the plan last month amid mounting pressure from Democratic politicians and advocates who had been calling on him for months to make good on his campaign promise to provide student debt relief.

The president's executive action, which offers up to $20,000 of debt relief for each borrower, also caps monthly payments for undergraduate student loans at 5% of a borrower's discretionary income while continuing the pause on federal student loan repayments through the end of December.

However, the program already has faced legal challenges from Republican states and right-leaning organizations.

After pushback from Republicans, the plan was updated to exclude borrowers with privately held student loans. Several million of the 45 million Americans who owe federal student loans fall into this category.

The Department of Education has said that borrowers who already have taken steps to receive loan forgiveness still can get it, but other borrowers who have not begun the process will not be eligible.

Last month, a nonprofit legal group that aims to fight "government overreach" filed a lawsuit to block the forgiveness.

The group, the Pacific Legal Foundation, has argued that Biden does not have unilateral authority to cancel debt and his decision to cancel some of the debt was illegal because Congress did not approve it.