With a new year came a new congressional budget.This budget recently went under review. The Congressional Budget Office has come out and stated that President Barack Obama’s student loan forgiveness program, the William D. Ford Direct loan program will end up costing taxpayers close to $22 billion more than expected. This program allows students with federal loans to pay as they earn, allowing them to cap monthly student loan payments at 10% of their income. The program also allows for student loan forgiveness after 20 years of payments. What ever is left over of that students loan will be forgiven and payed for with taxpayer dollars.
Obama hopes to try and ease the burden of repaying student debt. With the rising cost of education and student debt he wants to make sure the repayment process does not put a heavy financial burden on the student. Having the student pay a flat 10% of their income will allow students to slowly pay off their loans at a rate that most graduates will be able to live comfortably off of. On the official government site they ran some calculations and a student that graduates with $40,000 in debt and makes $25,000 a year the average savings they would get form this program would be $4,877.28. There is more than 1 trillion dollars in student debt and Obama hopes this plan will help students slowly pay that debt off while not breaking their banks and to reward those that use this plan.
Not everyone however, is a big fan of this new plan. Many people and officials have spoken out against it. Many people argue that the estimated $22 billion in Obama’s new loan forgiveness program will cost the taxpayers each year is not the right way to go. Many fear that it makes it too easy for colleges to raise the already inflated price of education as the taxpayers are there to foot the bill if the student is unable to pay off their outstanding debt within 20 years. Many people argue that it is a sneaky way to transfer the cost of college away from those who benefit from it. It could become a huge burden for taxpayers as the new program encourages students to take out more loans.With a struggling economy and national debt at an all time high many fear this program is not the right answer to rising student debt.