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(FOX BUSINESS) – The Education Department vastly underestimated the cost of the federal student loan program and will likely lose $197 billion on loans it issued over the past 25 years, according to a Government Accountability Report released on Friday.
The federal watchdog said that from 1997 to 2021, the department estimated the student loan program would generate about $114 billion, when in fact it was actually losing billions because of revised assumptions about borrowers and repayments, pandemic-related policy changes that affected the program and the expansion of a popular plan that tied repayments to a borrower's income. The department's calculations were off by roughly $311 billion.
One of the biggest contributors to the deficit is the federal moratorium on student loan payments that began under former President Donald Trump as part of a sweeping COVID-19 relief package. President Biden repeatedly extended the payment pause when he entered office and is facing growing pressure from progressive lawmakers to so again when the freeze expires in August.
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