LOUISVILLE, Ky. — Plenty of questions still loom over President Joe Biden's initiative to give millions of college students across the country financial relief.
This week, the White House said Biden's program will completely wipe federal student debt for around 20 million people.
University of Kentucky economics professor Ken Troske estimates the initiative will equate to around $300 billion in funds the federal government now won't be getting back.
"When the government was counting all their finances, they were counting on getting that into their budget at some point when these people paid it back," he said. "Somehow they'll need to find that money that was coming back in some other way."
On Thursday, Troske told WHAS11 tax increases are a possibility, but he said there's no way to predict what Congress will do to cover these costs down the line.
We fact-checked with our own calculations Thursday, based on the White House's projection that the plan will allow 20 million people to be student loan debt-free.
For argument's sake, we tested an example where 15 million of those people theoretically fell in the $10,000-forgiven range and the other 5 million being Pell Grant recipients and getting up to $20,000 slashed, as promised.
That equates to a rough estimate of $250 billion, much higher than the $4 billion average a White House spokesperson said will be coming in to offset cancellations once repayments start back up in January.
Troske says this is where the federal government will have decisions to make.
There are also questions as to the group of people this will directly impact.
Biden was adamant that Pell Grant recipients, students who applied to college under a significant financial hardship, will benefit greatly.
But Troske said for others not in this category, the salary range may not necessarily target those hit hardest during the pandemic. He says the income threshold will still include many seeking doctorates and law degrees early in their careers, who will in many cases go on to be wealthy.
"The [thinking] that a student loan will slow them down compared to someone who didn't take out a student loan is not the right comparison. It's the comparison to what would have happened to them had they not gone to college or taken out a student loan," Troske said.
He believes tying the program to FAFSA and parent household income might have been a more accurate measure for those most in need.
Regardless, millions of people are set to get at least some relief through this initiative.
A White House senior spokesperson says results from the program are expected to show around the same time as repayments resume to start 2023.
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