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It estimates a $20 billion present-value increase for suspended payments, interest accrual, and collections from September 2022 to December 2022, and an additional roughly $400 billion present-value increase from canceling up to $10,000 of debt for eligible borrowers. The letter explains discounting under the Federal Credit Reform Act, timing of effects over about 30 years, data sources, key assumptions, and high uncertainty in cost projections, with further estimates to follow.",{"@graph":69,"@context":122},[70,84,105],{"@type":71,"itemListElement":72},"BreadcrumbList",[73,77,79,82],{"item":74,"name":75,"@type":76,"position":8},"https://docshare.wps.com","Home","ListItem",{"item":78,"name":9,"@type":76,"position":14},"https://docshare.wps.com/document/",{"item":80,"name":40,"@type":76,"position":81},"https://docshare.wps.com/document/research-report/",3,{"item":83,"name":65,"@type":76,"position":19},"https://docshare.wps.com/document/costs-of-suspending-student-loan-payments-and-canceling-debt-september-26-2022-letter/583956/",{"url":83,"name":65,"@type":85,"image":86,"author":91,"headline":65,"publisher":94,"fileFormat":97,"inLanguage":63,"description":67,"dateModified":98,"datePublished":99,"encodingFormat":97,"isAccessibleForFree":100,"interactionStatistic":101},"DigitalDocument",{"url":87,"@type":88,"width":89,"height":90},"https://docshare.wps.com/thumbnails/costs-of-suspending-student-loan-payments-and-canceling-debt-september-26-2022-letter/583956.png","ImageObject",300,407,{"name":92,"@type":93},"\tCallum ","Person",{"url":74,"name":95,"@type":96},"DocShare","Organization","application/pdf","2026-11-10","2026-10-15",true,{"@type":102,"interactionType":103,"userInteractionCount":81},"InteractionCounter",{"@type":104},"ViewAction",{"@type":106,"mainEntity":107},"FAQPage",[108,114,118],{"name":109,"@type":110,"acceptedAnswer":111},"What cost increase does CBO estimate from suspending student loan payments and related collections?","Question",{"text":112,"@type":113},"CBO estimates the present-value cost of outstanding federal student loans will increase by $20 billion due to suspended payments, suspended interest accrual, and involuntary collections from September 2022 to December 2022.","Answer",{"name":115,"@type":110,"acceptedAnswer":116},"How much additional present-value cost does CBO estimate from canceling student debt under income limits?",{"text":117,"@type":113},"After the suspensions, CBO estimates an additional increase of about $400 billion in present value from canceling up to $10,000 of debt for borrowers below specified income limits, and another $10,000 for eligible borrowers who also received at least one Pell grant.",{"name":119,"@type":110,"acceptedAnswer":120},"Why are CBO’s student-loan cost estimates described as highly uncertain?",{"text":121,"@type":113},"Uncertainty is greatest in projections of how much borrowers would repay without the executive action and how much they will repay with it. These depend on future economic conditions and possible future modifications to loan terms.","https://schema.org",{"og:url":83,"og:type":124,"og:title":65,"og:site_name":95,"og:description":67},"article",{"robots":126,"canonical":83},"index,follow",{"doc_id":128,"site_id":62},583956,1792746760,{"code":4,"msg":5,"data":131},{"doc_id":128,"user_id":132,"nickname":92,"user_avatar":133,"doc_module":4,"category_id":39,"category_name":40,"doc_title":65,"doc_description":67,"doc_content":134,"file_id":135,"file_url":136,"file_type":137,"file_size":138,"view_count":81,"is_deleted":4,"is_public":8,"is_downloadable":8,"audit_status":8,"page_count":24,"language":139,"language_code":63,"site_id":62,"html_lang":63,"table_of_contents":140,"faqs":141,"seo_title":142,"seo_description":67,"update_tm":143,"read_time":144,"preview_page_count":4},137451211410,"https://ap-avatar.wpscdn.com/avatar/2000bb0a9246f588df?x-image-process=image/resize,m_fixed,w_180,h_180&k=1786362646172706240","CONGRESSIONAL BUDGET OFFICE Phillip L. Swagel, Director  \nU.S. Congress  \nWashington, DC 20515  \nHonorable Richard Burr Ranking Member  \nCommittee on Health, Education,  \nLabor, and Pensions United States Senate Washington, DC 20510  \nSeptember 26, 2022  \nHonorable Virginia Foxx Ranking Member Committee on Education  \nand Labor  \nU.S. House of Representatives Washington, DC 20515  \nRe: Costs of Suspending Student Loan Payments and Canceling Debt  \nDear Members of Congress:  \nThis letter responds to some questions you asked about the effects of President Biden’s August 24, 2022, announcement on executive actions affecting student loans.  \n• The cost of outstanding student loans will increase by $20 billion because an action suspended payments, interest accrual, and involuntary collections from September 2022 to December 2022, the Congressional Budget Office estimates. That present-value cost is relative to the amounts in CBO’s May 2022 baseline projections. 1  \n• After accounting for those suspensions, CBO estimates that the cost of student loans will increase by about an additional $400 billion in present value as a result of the action canceling up to $10,000 of debt issued on or before June 30, 2022, for borrowers with income below specified limits and an additional $10,000 for such borrowers who also received at least one Pell grant.  \nCBO continues to analyze the executive actions and will publish additional estimates as soon as they are completed. The estimates presented here do not include any effects of the actions affecting income-driven repayment plans, any other changes in loan terms, or effects on loans issued after June 30, 2022. The present values of expected reductions of cash inflows to the Treasury are calculated by discounting those flows as specified by the Federal Credit Reform Act (FCRA) .2 They rely on information available as of today about  \nthe executive actions, though more may become available when the application for canceling debt is published.3  \nThe cost of debt cancellation is the present value of the borrowers’ projected repayments of student debt before accounting for the cancellation minus the present value of repayments after doing so. As specified by FCRA, the costs of payment suspension and of debt cancellation will be recorded by the Office of Management and Budget in the federal budget as an increase in the deficit during the fiscal year in which the terms of the loans are modified. CBO will report those amounts in its Monthly Budget Review after they are recorded.  \nReduced cash inflows to the Treasury will increase the amounts that the federal government borrows over time. The effects on cash inflows—which are used to calculate the present values—will occur over roughly the next  \n30 years, as loan repayments will be smaller than they would have been otherwise (see Figure 1) .4 In 2023, for example, repayments will be reduced by about 0.08 percent of gross domestic product (GDP), CBO estimates.5 By comparison, in CBO’s May 2022 baseline projections, the federal deficit in 2023 is 3.75 percent of GDP.  \nFigure 1.  \nEffects of Payment Suspension and Debt Cancellation on the Repayment of Student Loans Relative to CBO’s May 2022 Baseline Projections  \nPercentage of GDP  \nData source: Congressional Budget Office.  \nThe repayments are nominal cash flows divided by GDP, not discounted values. GDP = gross domestic product.  \nAs of June 30, 2022, 43 million borrowers held $1.6 trillion in federal student loans.6 About $430 billion of that debt will be canceled, CBO estimates. In its May 2022 baseline, CBO projected that for many borrowers in income-driven repayment plans, a portion of the amounts canceled through executive action would eventually be forgiven anyway. CBO also projected that many borrowers in fixed-length repayment plans would accrue and pay interest on the principal amounts canceled through executive action. Because of the executive action, those borrowers will now pay less in pr","cbCaioaTxMmKVcpX","https://ap.wps.com/l/cbCaioaTxMmKVcpX","pdf",223946,"English","# Executive actions and response scope\n# Estimated cost impacts (suspension and cancellation)\n## Present-value calculations and timing\n# Baseline context and borrower eligibility assumptions\n## Administrative data and projection inputs\n# Uncertainty and next steps","[{\"question\":\"What cost increase does CBO estimate from suspending student loan payments and related collections?\",\"answer\":\"CBO estimates the present-value cost of outstanding federal student loans will increase by $20 billion due to suspended payments, suspended interest accrual, and involuntary collections from September 2022 to December 2022.\"},{\"question\":\"How much additional present-value cost does CBO estimate from canceling student debt under income limits?\",\"answer\":\"After the suspensions, CBO estimates an additional increase of about $400 billion in present value from canceling up to $10,000 of debt for borrowers below specified income limits, and another $10,000 for eligible borrowers who also received at least one Pell grant.\"},{\"question\":\"Why are CBO’s student-loan cost estimates described as highly uncertain?\",\"answer\":\"Uncertainty is greatest in projections of how much borrowers would repay without the executive action and how much they will repay with it. These depend on future economic conditions and possible future modifications to loan terms.\"}]","Costs of Suspending Student Loan Payments and Canceling Debt - September 26, 2022 Letter | PDF",1792049179,13]