According to a watchdog, the federal government could lose $197 billion on student loans.
The U.S. Department of Education is expected to lose $197 billion in federal student loan repayments over the next 25 years.
Initially, the Education Department estimated that these loans would generate approximately $114 billion in revenue.
According to the Government Accountability Office, a federal watchdog, they will actually cost the federal government $197 billion.
The Covid pandemic-era pause on most federal student loan payments accounts for a large portion of the additional costs.
As a result, most federal student loan borrowers haven't made a payment in more than 2 years, and no interest has accrued on their balances.
According to higher education expert Mark Kantrowitz, the GAO's findings were not surprising given the policy.
According to the GAO analysis, loans made between 1997 and 2021 are expected to cost the government nearly $9 for every $100 disbursed.