The Obama administration’s student loan program came up $21.8 billion short last year because of unpaid and forgiven loans.
According to Politico, which found the number buried in President Obama’s 2016 budget proposal this week, the shortfall is “the largest ever recorded for any government credit program.”
The president’s student loan initiative limits student loan payments to 10 percent of the borrower’s income, and forgives outstanding debt after 20 years—or 10 years if the borrower works in public service.
According to WhiteHouse.gov, the initiative is “part of the Obama-Biden administration’s ambitious agenda to make higher education more affordable and to help more Americans earn college degrees.”
Politico reports that 40 million Americans currently hold $1.2 trillion in outstanding student loan debt.
Romina Boccia, the Grover M. Hermann fellow in federal budgetary affairs at The Heritage Foundation, said the federal government “is hiding the very real taxpayer exposure to risk that arises from its massive and growing student loan portfolio.”
“If the federal government included the market risks of that portfolio, its student loan programs would quickly reveal themselves as big money losers for taxpayers,” said Boccia.
“According to the Congressional Budget Office, using a fair-value approach to account for student loans shows them to drain federal coffers by $88 billion over the decade—a figure that can be expected to grow even higher given Obama’s new repayment program, which would forgive many of the loans,” she added.
According to Politico, because of a “quirk” in how credit programs are budgeted, the $21.8 billion difference can be added to the deficit without “appropriations or even approval from Congress.”