With Biden’s student loan forgiveness proposal coming before the Supreme Court in a week, federal student loan relief will be receiving a great deal of attention. That is appropriate given the enormous costs involved, but Biden’s latest proposal would add to substantial ongoing federal student loan relief. I compiled AEI’s Student Debt Forgiveness Tracker to account for forgone loan revenues that have already gone out, and it’s far more than you might think. The total as of February 2023 is $256 billion and, depending on the Court’s ruling and finalization of Biden’s proposed regulations, could climb rapidly.
These are unimaginable numbers, but precisely because they are so large, it is worth the work of getting our heads around them, and what else such sums could be used for.
One way to grasp this amount of money is by imagining the cash. Start by picturing a stack of $100 bills 17 miles high. Now imagine ten of them. That is what a quarter of a trillion dollars looks like.
Wages give another perspective. The Bureau of Labor Statistics reports that the median annualized wage of full time workers for the 4th quarter of 2022 was $56,420. At $256 billion, the total forgiveness during the Trump and Biden administrations is more than the combined median salaries for 4.5 million Americans. The total forgiven by Biden’s own administrative authority alone, $201 billion, is equal to the median salary for over 3.5 million Americans.
Perhaps more revealing comparisons can be made to substantial parts of the federal budget. After all, the tracker captures student loan revenues that have not gone into the U.S. Treasury, and the Treasury (or the deficit) funds federal budget expenditures. The chart below compares forgone student loan revenues to 2022 budget outlays, drawn from Brian Riedl’s wonderful 2022 budget chart book. It is interactive and allows comparisons to both the total amount forgiven as well as its constituent parts (accessed by clicking to turn off categories of forgiveness).
Federal education budgeting seems like a reasonable place to start, and total revenue that has already been forgone is more than double the total education outlays for the 2022 budget. Even excluding the payment pause (click on the categories in the legend), which accounts for a substantial majority of the total forgiveness, the remaining revenue is nearly half of total federal education outlays. The pause itself is equal to outlays for a year’s worth of spending on Veterans benefits, at $200B.
Other entries in this chart make the forgiveness total look small in relative terms. That is, until you consider the enormousness of the relative categories. For instance, total forgiveness is equal to about two thirds of corporate taxes expected in the 2022 Federal Budget—that’s all federal revenue from corporate income taxes for an entire year. It’s a similar portion of Medicaid spending, a major entitlement program providing healthcare for millions of low-income Americans.
The last two entries in the chart, Medicare and defense spending, are enormous federal expenditures: Medicare provides federal health insurance for any American age 65 or older, and defense outlays, totaling $685 billion, pays for, among other things, the Army, Navy, Air Force, Marines, Coast Guard, and the U.S. Space Force. Already forgone student loan revenue is well over a third of each of these budget behemoths.
Ultimately, what we are looking at is forgone student loan revenue, overwhelmingly authorized by executive authority and not by Congress, that either exceeds or makes up a large portion of major priorities laid down by both Congress and the President in the 2022 Budget. More astonishing than these totals is that they will grow, especially if President Biden gets his way on future forgiveness measures. If he does, forgone student loan revenues over the next decade would far exceed every entry seen above.
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