Student Loans

Maintaining the Student Loan Forgiveness Application Will Cost an Estimated $100 Million

This latest expense is yet more evidence that sweeping student loan forgiveness will end up doing considerable economic harm.


While the incredible costs of the Biden administration's federal student loan forgiveness plan are widely known, yet another expense of the program is stirring controversy: maintaining the online application for loan forgiveness is expected to cost nearly $100 million annually.

This latest expense—not included in the Congressional Budget Office's recent estimate of the program's cost to taxpayers—is yet more evidence that sweeping student loan forgiveness will end up doing considerable economic harm.

In August, President Joe Biden announced a sweeping federal student loan forgiveness plan. Under the proposal, most borrowers making under $125,000 annually and married couples making less than $250,000 would receive $10,000 each in loan forgiveness. For borrowers who received a Pell Grant, forgiveness is increased to $20,000.

The program stands to be wildly expensive, with recent estimates from the Congressional Budget Office predicting that its cost will be $400 billion. However, as the Biden administration gears up to formally release the online application for loan forgiveness, other large costs are also becoming clear. Documents submitted by the Education Department to the Office of Management and Budget show that the department estimates it will cost $99,900,000 per year to maintain the application and the program's associated communications through March 2024. According to the Department of Education, these costs are "related to development of website forms, servicer processing, borrower support, paper form processing and communications related to this effort."

While the current estimate for application maintenance and support is high, there is reason for concern that the cost will come to exceed that. For example, the ill-fated website was originally estimated to cost $93.7 million—yet it eventually grew to cost taxpayers over $2 billion. Considering that the Biden administration already appears to be lowballing the cost of student loan forgiveness, estimating that federal student loan forgiveness will only cost $240 billion over the next decade, there is reason to worry that it is underestimating the cost of maintaining its application website as well.

"You might think, well, why not just link federal student loan records with IRS data so that we have automatic income verification? Because that would essentially do the trick in terms of the Department of Education knowing who would be eligible," Beth Akers, a senior fellow at the American Enterprise Institute, tells Reason. However, Akers notes that "there is a legislative ban on the creation of what is called a unit records data system. The idea is that the Department of Education should be prohibited from following student borrowers' income across time which would be enabled by the creation of that data set. And I guess the motivation for that initially was privacy."

Akers says this problem could have been avoided if student loan forgiveness had been enacted through the legislative process rather than by executive fiat. "If our lawmakers in Congress had decided that this is something they wanted to do, it wouldn't have been unreasonable to think, at the same time, they would have lifted the ban even momentarily to allow for the processing of these cancellations," Akers explains.

The staggering price the Biden administration places on upkeep for the student loan forgiveness application is yet more evidence of the true, bloated nature of the policy. It should come as no surprise that student loan forgiveness will be riddled with extra costs—costs that will no doubt be pushed onto taxpayers.