Apr 14, 2024 11:29 PM EDT By Joy Liwanag, UniversityHerald Reporter

President Biden's plan to forgive some or all student loans for 26 million Americans has garnered significant attention and debate.

According to  Penn Wharton Budget Model economists, the plan would cost about $84 billion over ten years. When combined with the administration's income-driven repayment plan, known as Saving On a Valuable Education (SAVE), the total cost would be $559 billion. This report examines the details of the plan, its potential impact, and the broader implications for student loan debt relief.

The Cost and Scope of the Plan

The estimated cost of the student loan forgiveness plan, $84 billion over ten years, is substantial. Still, it is significantly lower than the cost of the SAVE program, which is projected to cost about $475 billion over the same period. The total cost of $559 billion, when including both plans, reflects the administration's commitment to providing relief to borrowers burdened by student loan debt.

The plan targets borrowers who fall into five discrete categories, although the specific details of these categories have not been fully disclosed. Individuals who owe more than they initially borrowed could have all their accrued interest eliminated if they earn less than $120,000 and are enrolled in the SAVE program. According to the analysis, this aspect of the plan is expected to cost about $58 billion.

READ ALSO: Biden Administration Introduces Sweeping Relief Plan For Over 26 Million Student Loan Borrowers, Prioritizing Economic Equity And Opportunity

Potential Impact and Criticisms

While the plan aims to provide much-needed relief to borrowers, critics argue that it may not address the root causes of the student loan debt crisis. Some argue that more comprehensive reforms are needed to address rising tuition costs and the broader impact of student loan debt on the economy.

Additionally, there are concerns about the plan's fairness, with some questioning why specific borrowers are eligible for loan forgiveness while others are not. The plan's focus on particular categories of borrowers has also been criticized for potentially excluding individuals who may also be struggling with student loan debt.

Comparisons to Previous Proposals

The estimated cost of President Biden's student loan forgiveness plan is lower than that of his initial proposal, which was struck down by the Supreme Court last summer. The original plan was estimated to cost about $519 billion over ten years, highlighting the administration's efforts to find a more cost-effective solution to the student loan debt crisis.

The SAVE program, which offers more generous repayment terms and quicker paths to forgiveness than other federal repayment plans, is a critical component of the administration's strategy to address student loan debt. However, its high cost has raised concerns about its long-term sustainability and the potential impact on the federal budget.

President Biden's plan to forgive some or all student loans for 26 million Americans represents a significant step towards addressing the student loan debt crisis. While the plan has a substantial cost, it is viewed as a necessary investment in the future of millions of Americans burdened by student loan debt. As details of the plan are finalized and implemented, its impact on borrowers and the broader economy will become more apparent.

RELATED ARTICLE: Biden's Student Debt Relief Plan: Here's A Closer Look At What's On The Table

See Now: Covert Team Inside Newsweek Revealed as Key Players in False Human Trafficking Lawsuit