Report: Student Loan Portfolio Would Reach Current Levels in Under 15 Years Following Widespread Debt Cancellation – NASFAA
If President Joe Biden were to use his executive authority to cancel all currently outstanding federal student loan debt, debt would return to the current level of $1.6 trillion by 2035 if no reforms were enacted to address the underlying issues that led borrowers to take out student loans in the first place, according to a new brief from the Committee for a Responsible Federal Budget (CRFB).
Furthermore, the CRFB report found that if Biden were to forgive $10,000 in federally-held student loan debt for each borrower — as he pledged when he was campaigning for the White House — debt would return to $1.6 trillion by 2025.
Should Biden follow Sen. Elizabeth Warren’s (D-Mass.) call to forgive $50,000 in student loan debt for each borrower, CRFB estimates the total level of student loan debt would reach $1.6 trillion by 2030.
“Importantly, these projections assume no change in borrower behavior. In reality, debt cancellation would likely lead to increased borrowing, slower repayment, and larger tuition increases as borrowers and schools would expect another round of cancellation in the future,” the report asserts. “Any behavioral changes would mean the portfolio would return even faster to its current size.”