CBO responds to questions from Congressman Warren Davidson and other Members about CBO’s estimates of the costs of student loan programs and how they have changed since 2010.
This letter responds to a request by Congressman Warren Davidson and other Members for information about the Congressional Budget Office’s estimates of the cost of student loan programs and how they have changed since 2010.
Overall, the estimated cost of the federal student loan program has increased since 2010. In CBO’s assessment, the increases (estimated before August 24, 2022, when President Biden announced certain executive actions) primarily stem from the use of income-driven repayment plans and not from eliminating the guaranteed student loan program and replacing it with direct loans. Those plans are more costly to the government than fixed payment plans because the required payments are generally lower since they depend on borrowers’ income, and borrowers may be eligible to have their unpaid balances forgiven after a certain number of payments.