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Student-Loan Outlook Is Reversed by CBO, Showing $31 Billion U.S. Cost - ABI

The federal student loan program will cost the federal government $31 billion over the next decade, according to recent estimates from the nonpartisan Congressional Budget Office, Bloomberg Government reported. That’s a shift from past CBO forecasts that the government would profit from the program. The CBO in April 2018 projected the program would bring in $8.7 billion over the next decade. In 2017, the office estimated a $114 billion windfall within the next 10 years. The latest data shows how the Education Department’s student loan program has slowly grown more expensive for taxpayers. While some of the increase can be attributed to interest rates, the bulk of the change has come from the cost of the almost $1.5 trillion in federal loans students already have outstanding. More loans are in default, and less is being collected on outstanding loans, according to the the department’s budget request. In addition, more borrowers than anticipated are enrolling in income-driven repayment plans. These allow borrowers to pay a percentage of their income for a set number of years, after which the remainder of the loan is forgiven. About 30 percent of borrowers with direct federal loans, the most common type, were in income-driven repayment programs in fiscal 2018, a 29 percent increase from two years before, according to the Education Department. Read more.

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