Risks On Gov’t Loans Issued Next Fiscal Year Will Cost Taxpayers More Than $65 Billion, CBO Says

The lifetime costs of new loans and guarantees issued in Fiscal Year 2025 are expected to cost taxpayers more than $65 billion, bolstered by lending initiatives implemented by the Biden-Harris administration, according to the Congressional Budget Office (CBO).

The losses on the administration’s loans are nearly double the $36.5 billion in risk costs that were estimated for Fiscal Year 2020 — the last full fiscal year before President Joe Biden took office, CBO data shows. The increase follows a variety of Biden-Harris initiatives that have boosted either loan issuance or loan forgiveness, such as the Inflation Reduction Act and the president’s student loan forgiveness plan.

The expected losses come primarily from student loan lending, with the CBO estimating approximately a quarter of student debt issued next year — $22.1 billion worth —  will not be repaid. The Biden-Harris administration’s August 2023 SAVE Plan cut undergraduate loan payments from 10% of discretionary income to 5% and provided loan forgiveness for borrowers whose original principal balances were $12,000 or less.

Loans issued by the Department of Energy (DOE) are also expected to fuel the losses, accounting for $13.5 billion, with nearly a quarter of the DOE’s new loans and loan guarantees written off as losses. In Fiscal Year 2021, before Biden signed the Inflation Reduction Act, which committed