Some policy experts were quick to sound an alarm after President Joe Biden announced a sweeping new plan Wednesday to cancel up to $10,000 in federal student loans for borrowers with incomes under $125,000.

Biden will cancel up to $20,000 for recipients of Pell Grants.

The plan, these experts say, will cost taxpayers and does nothing to solve the tough unaffordability issues that plague higher education in the U.S.

"There's a transfer of wealth from the society at large to people who borrowed to go to college right now," said Andrew Lautz, director of federal policy at the National Taxpayers Union.

"That has consequences for consumers," Lautz said. "It has consequences for taxpayers."

Lautz published an estimate on Tuesday that found Biden's plan could cost the average taxpayer more than $2,000, based on the $10,000 forgiveness per student loan borrower that had been touted.

That is based on the assumption that policymakers would need to make up for the total cost of the forgiveness through tax increases, spending cuts, borrowing or a combination of those strategies.

However, the plan released by Biden on Wednesday could be even more costly to taxpayers, Lautz said.

That is due to the inclusion of up to $20,000 in forgiveness for Pell Grant borrowers and a 5% cap on repayment of undergraduate loans in relation to monthly incomes.

"It will raise the costs or budget impact of the policy overall," Lautz said.

The National Taxpayers Union's estimate of costs per taxpayer is based on data from the Penn Wharton Budget Model, which found the total cost of proposal could be $329.1 billion over 10 years, based on $10,000 in forgiveness for borrowers with less than $125,000 in income.

Based on a total of under 158 million taxpayers in 2019, that works out to $2,085.59 per taxpayer, the National Taxpayers Union found.

The Penn Wharton estimate is "definitely going to increase" based on the Pell Grant and income-based repayment features announced by Biden on Wednesday, Wharton professor Kent Smetters said.

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