It wasn’t just conservatives who were awarded a major victory last week when the Supreme Court struck down the student loan debt relief plan that President Joe Biden put forward. The country at large got to celebrate the huge win.
While many liberals and some students certainly weren’t happy with the fact that the high court ruled that Biden’s plan to cancel as much as $20,000 in federal student loan debt for some borrowers was unconstitutional, there’s no denying the fact that it will save the country a boatload of money.
In fact, it’s estimated that taxpayers will save more than $300 billion now that the plan has been struck down.
Last Friday, the Supreme Court voted 6-3 that the unilateral decision Biden made to cancel some federal student loan debt via executive order circumvented the constitutional right that Congress holds to make all laws regarding spending.
Biden’s plan had been blocked by lower courts while legal challenges were filed against it, which ultimately led to the high court taking on the case.
If the plan had been allowed to go through, couples who earned as much as $250,000 would have qualified for federal student forgiveness of either $10,000 or $20,000.
The federal Department of Education originally estimated that Biden’s debt relief plan would’ve cost taxpayers roughly $30 billion per year for the next 10 years because of the loan payments that wouldn’t have been made. That amounts to roughly $305 billion over the next decade, or $2.5 billion every month.
The net present value of the forgiveness program was estimated to be worth about $379 billion over the next 10 years, according to the DOE.
In anticipation of having to cover the costs associated with the debt forgiveness plan, the U.S. Treasury took on a $430 billion charge against the 2022 fiscal year budget. That number also included costs associated with the ongoing moratorium on federal student loan repayments that started during the height of the COVID-19 pandemic.
The senior policy director of fiscal watchdog group the Committee for a Responsible Federal Budget, Marc Goldwein, estimated that roughly $320 billion of these pre-emptive costs would now be reversed during the 2023 fiscal year, as a result of the high court ruling.
According to a forecast conducted by the Congressional Budget Office, there will be an increased deficit of $1.539 trillion this year because of increased spending, higher healthcare costs and falling revenues. By reversing $300 billion from that number, though, the fiscal deficit for this year would seemingly fall a little from the year before.
As Goldwein explained:
“It’s deficit reduction relative to a deficit increase that never really went into effect. [Biden] announced the policy and they weirdly recorded it as having increased the deficit before they implemented the policy in any meaningful way.”
Goldwein added that many of the borrowers who were set to have some of their federal student loans forgiven will actually now benefit more from the repayment scheme that’ll be driven by income numbers.