While the incredible costs of the Biden administration's federal education loan forgiveness plan are well known, another expense of this program is stirring controversy: maintaining the online application for loan forgiveness is expected to cost nearly $100 million annually.
This latest expense-not contained in the Congressional Budget Office's recent estimate from the program's cost to taxpayers-is yet more evidence that sweeping student loan forgiveness will end up doing considerable economic harm.
In August, President Joe Biden announced a sweeping federal education loan forgiveness plan. Under the proposal, most borrowers making under $125,000 annually and married couples making under $250,000 would receive $10,000 each in loan forgiveness. For borrowers who received a Pell Grant, forgiveness is increased to $20,000.
The program stands to become wildly expensive, with recent estimates in the Congressional Budget Office predicting that its cost will be $400 billion. However, because the Biden administration gears up to formally release the online application for loan forgiveness, other large costs are also becoming clear. Documents submitted by the Education Department to the Office of Management and Budget show that the department estimates it'll cost you $99,900,000 each year to maintain the application and also the program's associated communications through March 2024. According to the Department of Education, these cost is \”related to growth and development of website forms, servicer processing, borrower support, paper form processing and communications related to this effort.\”
While the present estimate for application maintenance and support is high, there is reason behind concern that the cost will come to exceed that. For instance, the ill-fated HealthCare.gov website was originally estimated to cost $93.7 million-yet it eventually grew to cost taxpayers over $2 billion. Considering that the Biden administration already seems to be lowballing the cost of education loan forgiveness, estimating that federal student loan forgiveness is only going to cost $240 billion over the next decade, there's reason to worry that it is underestimating the price of maintaining its application website too.
\”You may think, well, why not just link federal student loan records with IRS data to ensure that we have automatic income verification? Because that would essentially do the trick with regards to the Department of Education knowing who'd meet the requirements,\” Beth Akers, a senior fellow at the American Enterprise Institute, tells Reason. However, Akers notes that \”there is really a legislative ban around the development of what is called one records data system. The concept would be that the Department of Education ought to be prohibited from following student borrowers' income across time which may be enabled by the development of that data set. And I guess the motivation for that initially was privacy.\”
Akers says this problem could have been avoided if student loan forgiveness have been enacted through the legislative process instead of executive fiat. \”If our lawmakers in Congress had decided that this is one thing they wanted to do, it wouldn't have been unreasonable to think, simultaneously, they'd have lifted the ban even momentarily to match the processing of those cancellations,\” Akers explains.
The staggering price the Biden administration places on upkeep for that education loan forgiveness application is yet more proof of the true, bloated nature of the policy. It should come as no real surprise that student loan forgiveness is going to be riddled with extra costs-costs that will without doubt be pushed onto taxpayers.
