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NextGen Magazine


Federal Government Adjusts Student Loan Loss Estimates Up by $53 Billion

Chris Gaetano
Published Date:
Jun 8, 2021
Student loans graduate books school

One year ago, the federal government estimated that it would ultimately lose about $15 billion on its $1.6 trillion student loan portfolio. This year, it has adjusted its estimated losses up to $68 billion, the Wall Street Journal reported. As dramatic as this adjustment, which was included in the proposed federal budget, may seem, it is still much smaller than the losses projected from the previous administration, which believed that it would lose two-thirds of its entire portfolio.

Regardless of the precise figures, the Journal said that these estimates reflect a growing understanding that many of these loans will never be paid off, and that losses will likely grow in the future. It added that these losses may add up even faster if President Biden follows through on his campaign promise to forgive $10,000 in federal student loan debt for individual borrowers, which would amount to a total of $377 billion. It would be even higher if the $50,000 advocated by more liberal members of the party went through, and, of course, be equal to $1.6 trillion if all federal student loans were to be forgiven entirely, as called for by lawmakers on the left.