Student Loan Losses Could Cost the U.S. Billions
November 25, 2020
The U.S. government could lose more than $400 billion from its student loan program. The analysis comes from a Wall Street Journal breakdown of an internal review the Education Department recently conducted. The report found that of the $1.37 trillion in student loan debt held by the government, borrows are likely to pay back $935 billion in principal and interest, meaning $435 billion would go unpaid.
The figures are much larger than other recent estimates because they focus on the full life of the loans. Previous projections only measured potential losses over the next decade.
The analysis did not factor in the roughly $150 billion in student loans originated and held by private lenders.
The Wall Street Journal points out that the potential losses are nearing the scale of the subprime mortgage crisis, which cost lenders $535 billion.