U.S. Expected To Forgive At Least $108 Billion In Student Debt
ARI SHAPIRO, HOST:
The Obama administration dramatically expanded a program to forgive student debt. Now a new report from the Government Accountability Office says it will cost much more than expected. Danielle Douglas-Gabriel is following this story for The Washington Post and joins us now. Hi there.
DANIELLE DOUGLAS-GABRIEL: Hi. How are you doing?
SHAPIRO: All right. So describe this program for us and how the Obama administration changed it.
DOUGLAS-GABRIEL: So there have been some version of income-driven repayment plan since the 1990s, but under the Obama administration, they dramatically expanded to a few different iterations, the most recent of which says that if you pay a certain percentage of your income for up to 20 years, after that 20 years, whatever remaining balance is left will be forgiven. As these programs have grown, a lot more people have enrolled, and as a result of that huge, soaring enrollment, the cost has gone up alongside of it.
SHAPIRO: How much has the cost gone up? I mean how much higher is it than anticipated?
DOUGLAS-GABRIEL: So right now from the fiscal years of 2009 to 2016, the GAO is projecting the costs have doubled from about $23 billion to something like $53 billion. Ultimately the GAO thinks that it's going to mean that mainly taxpayers will have to forgive about $108 billion worth of student loans in the coming years.
SHAPIRO: White House Spokesman Josh Earnest was asked about this at today's White House briefing. He said he had not read the GAO report, but he defended the loan forgiveness program. Let's listen to a little bit of this.
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JOSH EARNEST: The strategy that we've put forward has benefited thousands of students across the country. There are many thousands more that have not availed themselves of the opportunity that is part of the income-based repayment program.
And so certainly if there are students or recent graduates out there that are struggling to repay their loans, we would encourage them to contact the Department of Education and learn more about income-based repayment.
SHAPIRO: Danielle, it sounds like he's saying even if more people than we anticipated enrolled - meaning it cost us more - we're ready for even more to enroll (laughter) even if that means the costs will be even higher.
DOUGLAS-GABRIEL: Well, you know, there is something to be said about these programs. They've really helped people manage their debt and as a result try to help them to avoid defaulting on their loans, which the government doesn't want. They want you to pay the money back.
The interesting part, though, is when President-elect Trump was running for office, he suggested actually expanding the program and potentially doubling the cost by lowering the amount of years it takes to get those loans forgiven from 20 years to 15 years.
SHAPIRO: Yeah, let's talk about what Trump would have wanted because so often Republicans are associated with pushing for less government spending. In this case, it sounds like Donald Trump would push for more.
DOUGLAS-GABRIEL: Well, you know, he's been pretty quiet. And I've asked his camp a couple of times about what his position is now that he's been elected. But during the tail end of the campaign, he suggested people should pay about 12 percent of their earnings towards their student debt. It should be automatic. And after 15 years, whatever's left over should be forgiven. That's pretty generous and could cost billions and billions of dollars if we continue on the current projection of enrollment.
SHAPIRO: This sounds like an area where the right and left may be converging then because of course during the campaign, first Bernie Sanders and then Hillary Clinton said higher education should be free.
DOUGLAS-GABRIEL: So it might be, but at the same time, members of Congress on both sides of the aisle have said that this program is just costing too much money. It doesn't really make sense right now, and it's not very targeted 'cause you've got to remember; the people who probably benefit the most from this are folks with really high loan balances from becoming a lawyer or a doctor. And there are a lot of folks in Congress right now that just don't see why taxpayers should be helping that particular segment of the population.
SHAPIRO: That's Danielle Douglas-Gabriel of The Washington Post. Thanks a lot.
DOUGLAS-GABRIEL: Thank you.
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