Costs of Suspending Student Loan Payments and Canceling Debt
Report
CBO estimates that the cost of outstanding student loans to the federal government will increase by about $400 billion because of an executive action canceling some debt.
This letter responds to some questions about the effects of President Biden’s August 24, 2022, announcement on executive actions affecting student loans.
The cost of outstanding student loans will increase by $20 billion because an action suspended payments, interest accrual, and involuntary collections from September 2022 to December 2022, the Congressional Budget Office estimates. That present-value cost is relative to the amounts in CBO’s May 2022 baseline projections.
After accounting for those suspensions, CBO estimates that the cost of student loans will increase by about an additional $400 billion in present value as a result of the action canceling up to $10,000 of debt issued on or before June 30, 2022, for borrowers with income below specified limits and an additional $10,000 for such borrowers who also received at least one Pell grant.
