WASHINGTON - Representative Pramila Jayapal, chair of the Congressional Progressive Caucus, issued the following statement on the Congressional Budget Office’s (CBO) estimate of the cost of President Biden’s executive order canceling student debt for more than 40 million borrowers:
“President Biden’s historic decision to cancel student debt brought well-deserved relief to 43 million people across the country — 97 percent of whom are low- and middle-income people — who have been unable to buy homes, invest in their communities, or start a family because of the burden of their debt. As CBO’s own report points out, 45 percent — nearly half — of Americans will see their loans fully canceled. The benefits of this decision cannot be overstated, especially for Black and Latino borrowers who have been disproportionately impacted by the student-debt crisis.
“Unlike Republicans, who sought tax breaks for corporations and billionaires, the fulfillment of this campaign promise illustrates President Biden’s commitment to lift up working families. The President’s student debt cancellation order is a major accomplishment with broadly shared benefits that is helping give people the freedom to reach their full potential, instead of sinking trillions of dollars into corporations and the rich.”
CBO’s cost projection for student debt cancellation is over a 40-year period instead of the 10-year projection CBO typically uses. When put in the context of the U.S. economy, student debt cancellation is projected to peak at a bit more than 0.09 percent of GDP in 2023-25. That is less than one-thirtieth of the military budget. Projected costs for student debt cancellation then fall to around 0.07 percent of GDP by 2032 and drop to 0.02 percent of GDP by 2042.