An analysis from the University of Pennsylvania’s Penn Wharton Budget Model found that Biden’s income-driven student loan repayment program may cost upwards of $559 billion over ten years.
The number is the model’s upper estimate and is based on a scenario where students max out the amount of available federal direct loans.
Biden’s repayment program will at least cost $391 billion if students do not heavily increase borrowing, according to the model.
The program is known as the “SAVE” plan, where undergraduate and graduate students taking out loans will pay an average of 5% and 10% of their income based on the original loan balances.
The plan also forgives borrowers for 20 or 25 years.
Penn Wharton’s prediction found that almost $200 billion of the program’s medium $475 billion cost is the result of $1.64 trillion in current loans.
More than half of the current loans are to move to SAVE after the program launches.
The remaining cost is to come from reduced payments for $1.03 trillion in new loans.
Reporting from Just the News:
Wharton's estimated costs associated with the SAVE program is still significantly less than its prediction of the cost of Biden's student loan forgiveness plan, which the budget model said could have been more than $1 trillion.
