Paul L. Caron
Dean




Thursday, December 1, 2016

GAO Assails Department Of Education's Cost Estimates Of Income-Driven Student Loans, Projects 39% ($137 Billion) Of 1995-2017 Loans Will Not Be Repaid

GAO (2016)Government Accountability Office, Federal Student Loans: Education Needs to Improve Its Income-Driven Repayment Plan Budget Estimates (GAO-17-22) (Nov. 30, 2016):

Because Education administers the federal government’s largest direct loan program, it is especially important that the agency corrects its methodological weaknesses associated with estimating IDR plan costs. More specifically, until Education assesses and improves the quality of data and methods it uses to forecast borrowers’ future incomes and accounts for inflation in its estimates, its IDR plan budget estimates may be unreliable.

GAO

https://taxprof.typepad.com/taxprof_blog/2016/12/gao-assails-department-of-educations-cost-estimates-of-income-driven-student-loans-projects-39-137-b.html

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Comments

@Reading,

Nor does the GAO report seem to take note of the fact that nearly 40% to 50% of enrollees are failing to successfully recertify each year, whether from servicer shenanigans or borrower forgetfulness.

Posted by: Unemployed Northeastern | Dec 2, 2016 6:58:17 AM

If you actually read the GAO report they say DOE is overestimating the costs because they are assuming no growth in starting salaries, not even for inflation.

Posted by: Reading | Dec 1, 2016 10:42:22 PM

@AMTbuff,

At the moment, there are five income-based repayment plans: ICR, IBR, PSLF, PAYE, and REPAYE. Only the last two have anything to do with Obama. And you'll please note that Direct Lending is still extraordinarily profitable even after these projections.

Posted by: Unemployed Northeastern | Dec 1, 2016 7:16:05 PM

Obama's Department of Education has not been asking questions for which it did not want to know the answers. This same curious incuriosity appears regarding politically incorrect research topics.

Posted by: AMTbuff | Dec 1, 2016 2:30:29 PM