MSEdesigns:
In my experience, Geofoam is an extremely expensive (>$125 per cubic yard) option which could be eliminated by use of ground improvment methods.
Some questions to ask your geotechnical engineer -
1. What is their allowable design based on? Settlement or ultimate capacity/SF?
2. If settlement, what type and magnitude of the settlement? Elastic or consolidation? 1-inch? 2-inches? More?
3. Is the settlement tolerance realistic? Is settlement being limited to 1-inch total beneath an MSE wall that is supporting a roadway or other forgiving structure? If so, that is overly conservative for a flexible wall.
4. Can a surcharge program be used to preinduce settlement and/or strength the bearing soil?
5. Can subgrade reinforcement be used to increase your bearing resistance? You are already looking to use geogrid in the retained soil.
6. Ground improvement could also be considered as bushel3 suggests. Geopiers, stone columns, CDF shafts, etc. could be used. These may give you a better "bang for your buck" than Geofoam.
Out of curiousity, what is the foundation subgrade like? Is the site level or on a slope?
As a re-read your post, it seems like there ought to be less expensive options that a 30+ foot geofoam wall.