The Obama administration revealed this week that extending its income-based repayment program to 5 million existing student loan borrowers will cost taxpayers more than $9 billion.
The price tag for the expansion of the Pay As You Earn program had not previously been made public but was included as part of the administration’s annual budget. It came as the U.S. Department of Education also raised its estimate of the long-term cost to the government of all federal direct loans.
The upward projection of $21 billion for all direct loan programs was primarily the result of more borrowers enrolling across all of the federal government’s various repayment plans that tie monthly payments to a borrower’s income and forgive outstanding debt after 10 to 25 years.
Enrollment in those income-based plans has surged over the past years, as the Obama administration and consumer advocates have actively marketed the programs to borrowers who are struggling to make payments. The number of people enrolled in the programs gone up by more than half over the past several years.
Read more at Inside Higher Ed: https://www.insidehighered.com/news/2015/02/06/obama-administration-pay-you-earn-expansion-will-cost-9-billion