Student loan forgiveness will cost each taxpayer an average of $2,500, research shows

By Leada Gore

The White House plan to forgive up to $20,000 in student loans for some borrowers will cost each taxpayer up to $2,500 per year, according to new research from the National Taxpayers Union Foundation.

The White House plan to forgive up to $20,000 in student loans for some borrowers will cost each taxpayer up to $2,500 per year, according to new research from the National Taxpayers Union Foundation.

President Biden announced last month Pell Grant recipients would receive up to $20,000 in loan forgiveness with up to $10,000 for other holders of federal loans. To qualify, individuals need 2020 or 2021 income of less than $125,000 or $250,000 combined household income.

Applications for forgiveness will be released in October.

NTUF, a fiscally conservative advocacy group, said its analysis shows the average burden per U.S. taxpayer for the federal student debt cancellation will be $2,503.11. That figure assumes policymakers would need to make up the total tally of the forgiveness through tax increase, spending cuts, borrowing or a combination of those strategies, CNBC reported.

The costs wouldn’t be spread evenly across taxpayers. Instead, those with the highest incomes would face the largest burdens, ranging from $158 a year per taxpayer earning up to $50,000 a year to $9.948 per taxpayer earning between $200,000 and $500,000.

“Some may dispute that taxpayers bear the cost of canceling student debt. But the $329 billion cost of student debt cancellation would be $329 billion previously borrowed from the federal government and not returning to the Treasury. Policymakers will need to make up for that gap in the future with government spending cuts, tax increases, more borrowing, or some combination thereof,” NTUF noted.

NTUF’s calculations are based on the total cost of debt cancellation of more than $400 billion divided by 158 million, the total number of U.S. taxpayers. You can read more here.