$435 billion is not chump change. From Adam Andrzejewski at realclearpolicy.com:
As President Joe Biden considers forgiving $10,000 in student debt per borrower and ending tuition for many students at public colleges, it is worth noting that college graduates already have not paid $435 billion back to the federal government.
That’s right, of the government’s $1.4 trillion student loan portfolio, almost one-third is unpaid.
That $435 billion is compared to the $535 billion that private lenders lost on subprime mortgages during the 2008 financial crisis.
The figure comes from FI Consulting, hired by the Department of Education, and whose work was checked by accounting firm Deloitte, and is a total of losses over the life of the loans in the federal government’s portfolio.
People in income-based repayment programs pay the loans based on how much they earn, and the government forgives loans that haven’t been paid back after 10, 20 or 25 years.
The findings estimated that on average, borrowers in income-driven repayment plans will repay 51 percent of their loans, while those in other repayment plans will repay 80 percent.
As the debate over implementing free college tuition and canceling student debt continues, policy experts, journalists and the public should keep this $435 billion figure in mind.
The #WasteOfTheDay is presented by the forensic auditors at OpenTheBooks.com.