Creating the student-loan forgiveness application isn’t cheap, new documents show.
The Education Department of President Joe Biden has issued the first sneak peek of the application for student debt cancellation of up to $20,000. It fulfills the promises made by government officials that it is “clear and uncomplicated.” Five simple pieces of information, including the borrower’s name, social security number, and email address, must be entered, verified as accurate, and then submitted.
Even yet, there are expenses associated with developing and putting that program into use. The Education Department broke out the expenses of the application form in a filing to the Office of Management and Budget (OMB) last week, estimating that it will cost $99,900,000 annually up until March 2024, when the application will no longer be operational.
According to the government, this is due to “costs linked to the creation of internet forms, servicer processing, borrower support, paper form processing, and communications related to this initiative.”
The application form will end in December 2023, but there are extra months to allow borrowers to submit any required income verification documentation. Republicans have long cited the expense of student loan forgiveness as a reason why the policy should not be put into action. In response, Biden set an income ceiling of $125,000 on the relief in order to focus it to lower earnings and reduce the overall expenditures of the program.
However, the expense of the application would corroborate arguments made by certain Democratic politicians before the announcement of the debt relief, who proposed that the relief be made available to all debtors without any means of testing. The Congressional Budget Office predicted that the total cost of debt relief would be $400 billion over a 30-year period. Democrats said that the figure demonstrates the policy’s importance to the millions of borrowers who will benefit from it, while Republican lawmakers used it to criticize the measure.
Sens. Elizabeth Warren and Chuck Schumer stated in a joint statement last month that “today’s CBO analysis makes clear that millions of middle-class Americans have more breathing room owing to President Biden’s historic decision to cancel student debt.” “We don’t agree with all of the CBO’s assumptions that underlie this analysis, but it is clear that the student loan forgiveness program and the payment pause for pandemic debt are policies that show how the government can and should invest in working people rather than the wealthy and multibillion-dollar corporations.”
Biden is implementing the application regardless of the expenses, but a court is debating on Wednesday whether or not to accept Republican-led states’ plea to suspend the relief because it would, among other things, harm their income streams.