A shocking new report shows the federal government will… $200 billion in student loan losses.
Here’s what you need to know.
The U.S. Department of Education has significantly underestimated the cost of the federal student loan program and is likely to… losses $197 Billion in Student Loans Spent in the past 25 years. According to the Government Accountability Office, the Department of Education initially predicted that student loans would bring in $114 billion from 1997 to 2021. However, their projections were $311 billion wrong.
Student loans: what happened
There are several reasons why the federal government will now lose money on student loans, including:
Federal student loan payments have been on hold since March 2020, when Congress passed the Cares Act, easing historic student loans. The Cares Act included a moratorium on federal student loan payments, 0% student loan interest, and the cessation of collection of student loan payments. President Donald Trump has extended this student loan waiver twice, while Biden has extended the student loan payment pause four times. More student loan borrowers are also choosing to enroll in means-tested repayment plans, which base a borrower’s monthly student loan payment on their discretionary income. Republican members of Congress, including Rep. Virginia Foxx (R-NC), the leading Republican on the House Committee on Education and Labor, asked for the report amid concerns about government spending. Foxx has criticized Biden for canceling $400 billion in student loans and said he should end the student loan payment pause.
Biden will decide within weeks whether to extend student loan payment break
As the student loan payment break ends on August 31, Biden could extend this student loan waiver for a fifth time. Education Secretary Miguel Cardona said Biden could extend the student loan payment pause. Biden, however, did not specify whether student loan borrowers should expect the student loan moratorium to continue. Biden said he will decide whether to implement large-scale student loan forgiveness before the student loan payment pause ends. Borrowers eagerly await Biden’s announcements, with leaked documents revealing potential student loan forgiveness plan. If Biden Extends Student Loan Payment Break, Borrowers Could Get more student loan deductions past August. However, if student loan payments start again, make sure you’re prepared. Here are some of the best ways to pay off student loans and save money: