Wintry mix spreads across Minnesota

MPR News helps you turn down the noise and build shared understanding. Turn up your support for this public resource and keep trusted journalism accessible to all. 

Turn Up Your Support

 from the U.S. Government Accountability Office finds the U.S. Department of Education miscalculated the cost of the federal student loan program. 

From 1997 to 2021, the Education Department estimated that payments from federal direct student loans would generate $114 billion for the government. But the GAO found that, as of 2021, the program has actually 

the government an estimated $197 billion. 

A percentage of that shortfall, $102 billion, stems from the unprecedented federal student loan payment pause that began under the CARES Act in 2020. The pause has been extended several times under former President Trump and President Biden. The most recent extension 

A bigger reason for the $311 billion difference, the report says, is that initial predictions did not account for the high percentage of borrowers who ended up enrolling in income-driven repayment (IDR) plans. About half of all direct loans are now paid through these plans, which are designed to help people who can't afford to make large monthly payments and which promise loan cancellation after 20-25 years. The GAO explains, "the monthly payment amount for borrowers in Income-Driven Repayment plans can change based on their economic situation." It's one of many reasons government costs around the program have been unpredictable.

IDR has also failed to live up to its promise to borrowers: 

 revealed that these plans have been badly mismanaged by loan servicers and the Department of Education. As a result, relatively few borrowers have actually succeeded in having their loans canceled through IDR.  

Business and Economic News

Education News

Sequoia Carrillo

Author

The Education Department originally thought the student loan program would make money — instead, it's losing it. ​​That's according to a new report from the U.S. Government Accountability Office.

The U.S. government underestimated the cost of the student loan program by billions

Go Deeper.

Like this?

News you can use in your inbox