Department of Education Makes $300 Billion Accounting Mistake on Student Loans

What's $300 billion between friends?

• A new report from the Government Accountability Office details a breathtaking discrepancy between what the federal government claimed the student loan program would generate, and what it actually costs taxpayers
• Student loans were "originally estimated to generate $6 in income per every $100 disbursed"
• Instead, they're "expected to cost the government almost $9 for every $1,000 disbursement
• 61% of the miscalculation is due to inaccurate assumptions
• The other 39% stems from programmatic changes
• None of this bad accounting includes any of the Biden administration's recent or forthcoming actions on student loans
  1. That’s right, instead of “making” $114 billion for taxpayers as the Department of Education originally claimed, the federal student loan program actually costs taxpayers $10 billion annually, costing $197 billion since 1997–a $311 billion discrepancy.
  2. The Department of Education’s massive undercounting of the cost of the federal student loan program is yet one more reason Washington should not be in the business of providing loans for college.
  3. A new report from the Government Accountability Office details a breathtaking discrepancy between what the federal government claimed the student loan program would generate, and what it actually costs taxpayers.
  4. “Although the Department of Education originally estimated federal Direct Loans made in the last 25 years would generate billion in income for the federal government, its current estimates show these loans will cost the government billions.
  5. To put a finer point on it, GAO found that federal student loans were “originally estimated to generate $6 in income per every $100 disbursed.” Instead, they’re “expected to cost the government almost $9 for every $100 disbursed.” Whoops.
  6. The Direct Student loan program (the largest federal student loan program) accounts for nearly $1.4 trillion of the $1.7 trillion in outstanding student loans.
  7. Biden’s proposed changes would expand access to loan forgiveness for total and permanent disability, expand the criteria through which borrowers can claim they’ve been defrauded by an institution and thus deserve loan discharge, and would make the Public Loan Forgiveness Program more generous by allowing borrowers to get credit toward PSLF for the months when they were in deferment and forbearance.
  8. Notably, the Department of Education proposes to “simplify” the process for claiming Public Service Loan Forgiveness by sharing data with other agencies in order to automatically grant PSLF for federal employees.
  9. Student loan forgiveness would likely encourage colleges to raise tuition even higher—particularly if graduates expect student loans to be forgiven again in the future.

https://www.dailysignal.com/2022/08/01/whoops-department-of-education-makes-300-billion-accounting-mistake-on-student-loans/