Home News What Would a $435B Loss Mean for Federal Student Loan Portfolio? – Inside Higher Ed

What Would a $435B Loss Mean for Federal Student Loan Portfolio? – Inside Higher Ed

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A new estimate quotes large losses, but defenders of the system say it’s functioning as designed. Will the number matter in the larger debate over debt forgiveness and federal lending policy?

It is an eye-popping number: $435 billion.

That is the amount of money the federal government can expect to lose on its $1.37 trillion student loan portfolio, according to an analysis consultants performed for the Department of Education. That analysis anticipates borrowers paying back $935 billion in principal and interest on their student loans, leaving $435 billion for taxpayers to absorb.

So what, exactly, does $435 billion represent? The Wall Street Journal, which recently uncovered and reported on the student loan analysis, compared it to the $535 billion private lenders lost on subprime mortgages in the 2008 financial crisis.

Count the $435 billion in other ways, though, and it comes to represent many, many different things about the patchwork way this country pays for students to attend colleges and universities — and the debate unfolding about whether that patchwork is going to change substantially in the near future.

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