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Biden’s new student loan forgiveness plan would cost an extra $84 billion: report

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Much of the new plan is already covered under SAVE, but key new provisions raise the price tag considerably. (iStock)

President Joe Biden’s new student debt elimination proposal would bring relief for millions more Americans, but a Penn Wharton Budget Model (PWBM) analysis shows it could add another $84 billion to an already costly plan.

The Biden Administration released a formal proposal to provide student debt relief to over 30 million borrowers. The new plan also proposes to eliminate accrued interest for 23 million borrowers and automatically discharge debt for borrowers eligible for loan forgiveness under SAVE, closed school discharge or other forgiveness programs, even if not enrolled. Additionally, student debt for borrowers who entered repayment for 20 or more years would be discharged. The plan would also provide relief to borrowers who experience hardship in paying back their loans.

“These distinct forms of debt relief are designed for borrowers struggling with their loans – and that’s a lot of people,” Under Secretary of Education James Kvaal said. “There are 25 million borrowers whose interest is growing faster than they can pay it down. That fact alone shows how badly President Biden’s student loan relief is needed.”

PWBM said that the new plan would cost an extra $84.06 billion on top of the $475 billion price tag for the Saving on a Valuable Education (SAVE) Plan, bringing the total cost to around $559 billion for both plans. 

The biggest cost of the plan is waiving up to $20,000 for millions of borrowers whose balances have grown because of unpaid interest. That part of the plan is estimated to cost roughly $58 billion. The second-largest cost, $19 billion, stems from eliminating student debt for borrowers in repayment for 20 years or more (or 25 years with graduate student debt). 

Private student loan borrowers can’t benefit from federal loan relief. But you could lower your monthly payments by refinancing to a lower interest rate. Visit Credible to speak with an expert and get your questions answered. 

BUY A HOME IN THESE STATES TO GET STUDENT LOAN DEBT RELIEF

Student loan cancellation keeps coming

More people are becoming eligible for student loan cancellation as they hit 10 years of payments. Since the launch of SAVE, nearly 8 million borrowers have received relief, including 4.5 million with a $0 monthly payment. Student loan forgiveness has reached millions even as the Supreme Court blocked Biden’s original debt forgiveness plan last June.  

The latest round of cancellations targets $7.4 billion in student loans for 277,000 borrowers, the Department of Education said in a statement. This brings the total debt forgiven over Biden’s presidency to $153 billion.  

Biden’s SAVE plan could lower borrowers’ monthly payments to zero dollars, reduce monthly costs in half and save those who make payments at least $1,000 yearly. Yet roughly three out of four borrowers who make $75,000 or less annually, and would benefit from the SAVE plan, still need to be enrolled, according to a recent Student Debt Crisis Center (SDCC) survey.

If you can qualify for a student loan refinance at a lower rate than you’re currently paying, there are usually no downsides to refinancing. You can use Credible to compare student loan refinancing rates from multiple private lenders at once without affecting your credit score.

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Biden student loan forgiveness plan faces legal challenge

Republican-led states filed suit against President Joe Biden and the U.S. Department of Education to stop the SAVE Plan. A total of 18 states have joined one of two lawsuits challenging the plan.

The lawsuits seek to halt the SAVE plan immediately, arguing that the U.S. Department of Education has no authority to alter student loan repayment plans. This would cancel more than $156 billion in student loan debt.  

The lawsuit also argues that the U.S. Supreme Court determined that Biden’s original forgiveness program violated federal law and that only Congress can authorize the forgiveness of student loans involving taxpayer money. 

statement from the Education Department said Congress gave the agency the authority to define the terms of income-driven repayment plans.

If you hold private student loans, you won’t be enrolled in a federal income-driven repayment plan, but you could refinance your loans to a lower rate. Visit Credible to compare options from different lenders without affecting your credit score.

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Have a finance-related question, but don’t know who to ask? Email The Credible Money Expert at moneyexpert@credible.com and your question might be answered by Credible in our Money Expert column.

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Trump CFPB cuts reviewed by Fed inspector general

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Director of the Office of Management and Budget (OMB) Russell Vought attends a cabinet meeting at the White House in Washington, D.C., U.S., April 10, 2025.

Nathan Howard | Reuters

The Federal Reserve’s inspector general is reviewing the Trump administration’s attempts to lay off nearly all Consumer Financial Protection Bureau employees and cancel the agency’s contracts, CNBC has learned.

The inspector general’s office told Sen. Elizabeth Warren, D-Mass., and Sen. Andy Kim, D-N.J., that it was taking up their request to investigate the moves of the consumer agency’s new leadership, according to a June 6 letter seen by CNBC.

“We had already initiated work to review workforce reductions at the CFPB” in response to an earlier request from lawmakers, acting Inspector General Fred Gibson said in the letter. “We are expanding that work to include the CFPB’s canceled contracts.”

The letter confirms that key oversight arms of the U.S. government are now examining the whirlwind of activity at the bureau after Trump’s acting CFPB head Russell Vought took over in February. Vought told employees to halt work, while he and operatives from Elon Musk‘s Department of Government Efficiency sought to lay off most of the agency’s staff and end contracts with external providers.

That prompted Warren and Kim to ask the Fed inspector general and the Government Accountability Office to review the legality of Vought’s actions and the extent to which they hindered the CFPB’s mission. The GAO told the lawmakers in April that it would examine the matter.

“As Trump dismantles vital public services, an independent OIG investigation is essential to understand the damage done by this administration at the CFPB and ensure it can still fulfill its mandate to work on the people’s behalf and hold companies who try to cheat and scam them accountable,” Kim told CNBC in a statement.

The Fed IG office serves as an independent watchdog over both the Fed and the CFPB, and has the power to examine agency records, issue subpoenas and interview personnel. It can also refer criminal matters to the Department of Justice.

Soon after his inauguration, Trump fired more than 17 inspectors general across federal agencies. Spared in that purge was Michael Horowitz, the IG for the Justice Department since 2012, who this month was named the incoming watchdog for the Fed and CFPB.

Horowitz, who begins in his new role at the end of this month, was reportedly praised by Trump supporters for uncovering problems with the FBI’s handling of its probe into Trump’s 2016 campaign.

Meanwhile, the fate of the CFPB hinges on a looming decision from a federal appeals court. Judges temporarily halted Vought’s efforts to lay off employees, but are now considering the Trump administration’s appeal over its plans for the agency.

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GameStop shares tank on convertible bond offering to potentially buy more bitcoin

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A Gamestop store is seen in Union Square on April 4, 2025 in New York City. 

Michael M. Santiago | Getty Images

GameStop shares slid on Thursday after the video game retailer and meme stock announced plans for a $1.75 billion convertible notes offering to potentially fund its new bitcoin purchase strategy.

The company said it intends to use the net proceeds from the offering for general corporate purposes, “including making investments in a manner consistent with GameStop’s Investment Policy and potential acquisitions.”

Part of the investment policy is to add cryptocurrencies on its balance sheet. Last month, GameStop bought 4,710 bitcoins, worth more than half a billion dollars.

The stock tanked more than 15% in premarket trading following the announcement.

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GameStop

GameStop is following in the footsteps of software company MicroStrategy, now known as Strategy, which bought billions of dollars worth of bitcoin in recent years to become the largest corporate holder of the flagship cryptocurrency. That decision prompted a rapid, albeit volatile, rise for Strategy’s stock.

Strategy has issued various forms of securities including convertible debt to fund its bitcoin purchases.

CEO Ryan Cohen recently said GameStop’s decision to buy bitcoin is driven by macro concerns as the digital coin, with its fixed supply and decentralized nature, could serve as protection against certain risks.

The brick-and-mortar retailer reported a decline in fiscal first-quarter revenue on Tuesday as demand for online gaming rose. Its revenue dropped 17% year-over-year to $732.4 million. 

The shares fell 6% on Wednesday after those results. Wall Street appears uncertain it can mimic the success of MicroStrategy.

Wedbush analyst Michael Pachter reiterated his underperform rating on GameStop Wednesday, saying the meme stock has consistently capitalized on “greater fools” willing to pay more than twice its asset value for its shares. The Wedbush analyst believes the bitcoin buying strategy makes little sense as the company, already trading at 2.4 times cash, isn’t likely to drive an even greater premium by converting more cash to crypto.

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