WASHINGTON — President Biden’s plan to wipe out significant amounts of student loan debt for tens of millions of borrowers could cost about $400 billion, the nonpartisan Congressional Budget Office said in a report Monday.
The estimate renewed the debate between supporters of student debt forgiveness and those who say the initiative amounts to reckless spending.
The C.B.O. also said the full price tag of the plan could push even higher because Mr. Biden extended a pause on federal student loan repayments through the end of the year, which could end up costing some $20 billion.
In August, Mr. Biden announced a plan to forgive $10,000 in debt for those earning less than $125,000 per year and $20,000 for those who had received Pell grants for low-income families. The C.B.O. expects that 90 percent of the 37 million borrowers with direct loans from the federal government would take advantage of debt forgiveness once it becomes available.
The White House indicated on Monday that it would push forward with its plan despite criticism from conservative critics who have vowed to launch legal challenges. On Monday, Karine Jean-Pierre, the White House press secretary, said the criticism amounted to “noise” and said that Americans who are eligible for a key portion of President Biden’s student loan relief plan should be able to apply for forgiveness “very soon.”
In a call with reporters on Monday, administration officials called the estimate “highly uncertain.”
Still, the official timing for debt relief is uncertain; the Department of Education said it would set up an application process by the end of the year.
About 60 percent of student loan borrowers have received Pell grants, and a majority come from families making less than $30,000 a year. The Education Department estimates that 27 million borrowers will qualify for up to $20,000 in relief.
Millions of other borrowers will be eligible for $10,000 in debt relief, as long as they earn less than $125,000 a year or are in households earning less than $250,000. Borrowers will be assessed based on the income they reported in 2021 or 2020.