Education and Labor Committee Republican Leader Virginia Foxx (R-NC), Rep. Greg Murphy (R-NC), Health, Education, Labor, and Pensions Committee Republican Leader Richard Burr (R-NC), and Senator Mike Braun (R-IN) released the following statement in response to the Government Accountability Office’s (GAO) report which found the Department of Education underestimated the cost of student loans by billions:
“For decades, the Department of Education has significantly underestimated the true cost of the Direct Loan program. Today’s GAO report shows that the Department’s budget was off by more than $300 billion—all of which will be paid for by hardworking American taxpayers.
“On top of that, GAO’s analysis doesn’t include the cost of Biden’s recent actions—such as the most recent $85 billion in new higher education regulations or his $145 billion Public Service Loan Forgiveness waiver. Nor do the costs include the rumored $10,000 loan forgiveness proposal, which would cost an estimated additional $250 billion.
“Any way you look at it, the claim that the federal government ‘profits’ off student loan borrowers is FALSE. Taxpayers have lost hundreds of billions of dollars on this program.
“President Biden is on track to make the most radical changes to postsecondary education at the expense of all taxpayers. The GAO report is only the latest evidence that, at best, Biden’s Department of Education doesn’t have a clue about the real harm of its policies; at worst, the political appointees there simply don’t care and are unwilling to disclose the true costs to the American public.”
Background: The non-partisan GAO evaluated the cost of the Direct Loans issued between 1997 and 2021. While the Department of Education originally projected that these loans would generate more than $100 billion in revenue, GAO found that these loans ended up costing American taxpayers nearly $200 billion—meaning the Department’s budget estimate was off by $311 billion. 61 percent of the budget error ($189 billion) was due to inaccurate and faulty assumptions about borrowers; the remaining 39 percent of the error ($122 billion) was due to programmatic changes to the federal loan program. ED claims that it is revising its budget model, but the new model will not be ready until 2026 at the earliest. Thus, ED will continue using the current, flawed budget model for the next three years to estimate the cost of the federal loan program.