In a report released on Wednesday, the U.S. Government Accountability Office said the federal government would forgive at least $108 billion of student debt in the coming years, an amount higher than expected.
The office also said the Department of Education’s method of forecasting the cost of its income-driven repayment program does not “ensure reliable budget estimates,” because, among other things, it does not factor in inflation.
The report looks at borrowers in such plans, an option created in the 1990s but expanded and popularized by the Obama administration as a way to prevent low-wage earners from defaulting. In income-driven repayment, borrowers put 10 to 20 percent of their monthly discretionary income toward repaying their student loans. After 20 or 25 years, any remaining balance is forgiven. By contrast, borrowers in standard 10-year repayment plans pay off their loans mortgage-style.
Read more at The Chronicle of Higher Education: http://www.chronicle.com/blogs/ticker/108-billion-in-student-debt-likely-to-be-forgiven-government-says/115825