Costs of the Proposed Income-Driven Repayment Plan for Student Loans
Implementing the Administration’s proposed rule for a new income-driven repayment plan would increase the government’s costs for federal student loans originated through 2033 by $230 billion, on a net-present-value basis, CBO estimates.
This letter responds to questions about the cost of the Administration’s proposed rule for a new income-driven repayment plan for federal student loans, as published by the Department of Education in the Federal Register on January 11, 2023.
The Congressional Budget Office estimates that if the final rule was unchanged from the proposed rule, the cost of the federal student loan program would rise by about $230 billion, on a net-present-value basis, over the 2023–2033 period.
The cost of outstanding loans would rise by $76 billion, which would be recorded as an increase in the deficit in 2023, the year in which the terms of those loans would be modified; and
The cost of new loans originated over the 2023–2033 period would rise by $154 billion, which would be recorded as adding to the deficit in the years in which loans were originated.