July 29, 2022

GAO Report Reveals Federal Student Loan Program Costs Taxpayers $311 Billion as Biden Prepares to Spend Hundreds of Billions in Loan Cancellations for the Wealthy

House Budget Committee Republican Leader Jason Smith (MO-08) released the following statement after a report from the Government Accountability Office (GAO) found that the Department of Education underestimated the cost of the federal student loan program by $311 billion:

“Democrats for years have justified the federal government as a loan provider under the pretense that it returns money to taxpayers. This week’s GAO report exposes that claim as an outright fabrication. Federally guaranteed student loans are in fact adding to – not subtracting from – the taxpayers’ tab. Whether the Department of Education failed to notice or simply did not care that a major program cost taxpayers an extra $311 billion, the outcome is unacceptable. This horrible finding also cries out for a closer look at all federal loan programs to consider whether there are other accounting methods that would more accurately measure the risk and costs to taxpayers.

“This news comes at the same time that President Biden is considering a $10,000 politically-motivated student loan giveaway to the wealthy that would cost an additional $250 billion and throw more fuel on an inflation fire that is ravaging the paychecks of working-class families. Democrats have made it clear that their goal is total forgiveness of all federal student loans – a gross attack on hardworking Americans that would transfer money from blue collar pockets to the wealthiest in our country.”

Key Points

GAO Report

  • From 1997 to 2021, the Department of Education falsely estimated the federal direct loan program would generate over $100 billion in revenue.
  • A report released this week shows the program actually cost taxpayers $197 billion over that time period, resulting in a $311 billion shortfall.
Cost of Biden’s Debt Cancellation Plan for Families Earning up to $300,000
  • $250 billion cost to taxpayers.
  • $360 billion added to the national debt.
Democrats’ Plan is a Handout to the Wealthy
  • 85% of adults without student loans would be forced to pay for the 15% of adults who choose to take on loans.
  • 70% of the benefit from cancelling student loan debt will go to those in the top half of the income spectrum.
  • 56% of all student loan debt is owned by the 14.3 percent of individuals with advanced degrees.
Taxpayers are already footing the bill for Biden’s loan moratorium
  • $4.3 billion per month cost to U.S. taxpayers from loan moratorium
  • $83 billion total cost to taxpayers from loan moratorium since Biden took office