“Under the president’s leadership, we are on track to reduce the deficit by over $1 trillion this year,” a White House spokesman, Abdullah Hasan, said in a statement defending the cancellation plan on Monday.
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But the budget deficit is coming down not only because of increased tax revenue. The government also borrowed trillions more than usual last year to pay for a $1.9 trillion stimulus package aimed at helping people, businesses and government endure the pandemic — and then did not do a similar round of borrowing this year. Administration officials are effectively arguing that they are paying for student loan relief in part by not borrowing more money for pandemic aid.
In a call with reporters on Monday held shortly after the C.B.O. score was released, administration officials called the estimate “highly uncertain.” In an effort to put the top-line figure into rosier context, the officials pointed out that the administration’s plan would reduce the amount repaid to the Treasury by about $21 billion, or 0.08 percent of the gross domestic product, in 2023, an amount reflected in the C.B.O. report.
The budget office uses a more conventional way of estimating the costs from policies like debt forgiveness, called a present value calculation. It estimates the cost of a plan as if it were delivered in a single windfall. It, too, called its estimates highly uncertain.
The official timing for debt relief is uncertain; the Department of Education has 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 estimated that 27 million borrowers would 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.
Source Article from https://www.nytimes.com/2022/09/26/us/politics/white-house-student-loan-forgiveness.html
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