The Department of Education projected that student loans would generate $ 114 billion in income in the last 25 years. However, a new report shows that federal loans for students have really cost the government $ 197 billion, a difference of $ 311 billion.
The findings come from a report from the Government's Responsibility Office published today that undermines a narrative of the department that the Department of the Federal Student Loan Program is generating income. The study, which analyzes data on student loans between 1994 and 2021, found that the Department of Education underestimated how changes in loan programs and the behavior of the borrower have affected the balance of federal student loans.
recent changes to the loan program since then the beginning of 2022 that was not included in the study, such as the exemption of forgiveness of the public service loan (PSLF) and Multiple group discharges of the federal debt of the federal debt of Student loans will generate the highest cost. In addition, if President Biden moves to cancel a pending student debt, the cost would also increase.
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The change, according to the report, is promoted by changes in the Federal Student Loan Program, as well as defective assumptions on the income of the borrowers, the reimbursement rates and the breach.
Although GAO did not offer recommendations for the department to improve its budget method, the report highlights the key factors for review that contribute to mass differences how much the student loan program is really costing taxpayers .
in a letter to the GAO in response to the report, under the Secretary of Education, James Kvaal, said: "In some cases, estimates are reviewed due to changes in data available for the department and the Department methodology to estimate costs. " He continued: "While the department always strives for the best possible estimates, there is some uncertainty inherent in the cost estimates of the department, which the department publicly reveals in the financial report of its agency and the president's budget."googetag.cmd. push (function () googetag.display ("dfp-ad-article_in_article"););););
The department However, it cannot realize the true true cost of the Federal Student Loan Program until the loans are completely paid. Therefore, it must estimate how quickly the borrowers will pay their debt, how many borrowers are expected to breach and how the income of the borrowers could change in a given year. The report found that since 1994, not a single group of borrowers has completely paid their debts.
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