The Department of Education (DOE) understated the cost of the federal student loan program by $311 billion, according to the federal government's watchdog agency.
Although the DOE originally estimated federal direct loans made in the last 25 years would generate billions in income for the government, its current estimates show these loans will cost the government billions, the Government Accountability Office (GAO) said in a report released Friday.
GAO said that from 1997 to 2021, DOE estimated the federal direct loan program would generate $114 billion in revenue. Instead, the program has cost the department $197 billion — a discrepancy of $311 billion.
The department disbursed $1.8 trillion in student loans during that time period.
Reps. Virginia Foxx, R-N.C., and Greg Murphy, R-N.C., and Sens. Richard Burr, R-N.C., and Mike Braun, R-Ind., the top Republicans on the House and Senate education committees, said "taxpaers have lost hundreds of billions of dollars on this program."
"For decades, the Department of Education has significantly underestimated the true cost of the Direct Loan program. Today's GAO report shows that the Department's budget was off by more than $300 billion — all of which will be paid for by hardworking American taxpayers," the lawmakers said in a statement, the Washington Examiner reported.
The Republicans also criticized the Biden administration's approach to student loan policy, noting that the GAO's report did not include recent DOE actions that expanded eligibility for certain loan forgiveness programs.
"President (Joe) Biden is on track to make the most radical changes to postsecondary education at the expense of all taxpayers," the Republicans said in a statement, the Examiner reported.
"The GAO report is only the latest evidence that, at best, Biden's Department of Education doesn't have a clue about the real harm of its policies; at worst, the political appointees there simply don't care and are unwilling to disclose the true costs to the American public."
The GAO's report said $189 billion (61%) of the $311 billion shortfall was due to the department making flawed or incorrect assumptions about student loan borrowers.
The additional $122 billion (39%) "is based on programmatic changes including the suspension of loan payments and interest due to the COVID-19 pandemic."
The report showed that the only time in the past 25 years that DOE achieved net income from the direct student loan program was during the 2012 fiscal year, when $600 million in revenue was generated.
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