CARBONDALE, Ill. (WSIL) -- The non-partisan Congressional Budget Office released an estimated price tag on President Joe Biden's plan to cancel billions of dollars in student loans.
The plan would cost roughly $400 billion over the next 30 years, according to a released Monday. The CBO says the plan is based on several assumptions and the number is 'highly uncertain'.
The price tag is a drop in the bucket in the economy in the long run, according to professor Kevin Sylwester of the SIU School of Business & Analytics.
Sylwester pointed out that the federal government spent about $5.3 trillion last fiscal year.
"If you just extrapolate $5.3 trillion over 30 years, $400 billion comes to less than a quarter of one percent," Sylwester said.
The group also accounted for the cost to extend Biden's pause on student loan payments through December, which was approximiately $20 billion according to CBO estimates.
Sylwester believes the plan was more of a political move than a sound economic investment.
"This is not targeting necessarily low income, and a lot of low income who don't go to college don't benefit from this at all," Sylwester said.
According to the plan individuals who make less than $125,000 and married couples who made less than $250,000 in 2020 or 2021 would qualify for up to $10,000 in student loan forgiveness.
Those who also utilized Pell Grants during college could qualify for an additional $10,000, pushing the potential loan forgiveness amount to $20,000.
Sylwester says the plan has two flaws: it doesn't reward people who quickly paid their debt and the cutoff amounts are too high.
The Biden Administration is facing a lawsuit out of an Indiana federal court. The plaintiff alleges that the loan cancelation will cause him to pay $1000 in state taxes for a loan that was canceled.Â
Meanwhile, the Department of Education is working to create a loan forgiveness application process by early October.