Many Americans are struggling to pay back their student loan debts—which are a burden financially as well as mentally. President Barack Obama and his administration are trying to help students out by forgiving some student loan debt, but a new study by the Government Accountability Office found that the program will cost taxpayers far more than expected.
The Government Accountability Office’s study, which was released today, found that the federal government is on track to forgive at least $108 billion in student loan debt—which is significantly more than previous estimates. According to the Wall Street Journal, this report is the first time the government has projected the entire cost of plans that connect a borrower’s payments to their earnings, which are known as Income-Driven Repayment (IDR) plans. The report notes, “While actual costs cannot be known until borrowers repay their loans, GAO found that current IDR plan budget estimates are more than double what was originally expected for loans made in fiscal years 2009 through 2016.”
Current versions of IDR plans were developed during President George W. Bush’s administration, but Obama’s administration really expanded the plans, which led to a huge growth in enrollment, according to Time. In the last three years, enrollment has more than tripled to 5.3 million borrowers as of this summer—which is about a quarter of all former students who borrowed directly from the government.
The plans break down loan bills into a small percentage of one’s monthly income, which greatly benefits struggling college graduates.
However, some experts are worried about the programs’ costs—which are clearly very high. The estimated $108 billion in debt forgiveness is about a third of the $352 billion in the estimated loan volume that American students are expected to take out from 1995 to 2017, according to Fortune.
The study also calls out the “weaknesses” of the Department of Education’s “approach to estimating IDR plan costs and quality control practices,” which contributed to the underestimated costs. The study explains: “Due to growing IDR plan popularity, improving Education’s estimation approach is especially important. Until that happens, IDR plan budget estimates will remain in question, and Congress’s ability to make informed decisions may be affected.”
It’s not clear what will happen to those with student loan debt going forward under the Trump administration. Reuters reports that Trump and/or Congress could limit or possibly even undo the Obama administration’s student loan relief programs.
source: complex.com BY MAC MCCANN