On October 21 2021 — against a backdrop of a long-running national discussion about student debt — a tweet asserting that “US student loans cost the government over $60B more to service than they bring in a year” became virally popular:
Wait was nobody going to tell me that US student loans cost the government over $60B more to service than they bring in a year??? They could literally be cancelled this second and the gov would have *more* money
— Max Has Nightmare Eyes (@chaoticgaythey) October 21, 2021
Wait was nobody going to tell me that US student loans cost the government over $60B more to service than they bring in a year??? They could literally be cancelled this second and the gov would have *more* moneyRev. Al Sharpton Owes Millions in Back Taxes – Truth! & Disputed!Rev. Al Sharpton Owes Millions in B...
Screenshots of the tweet spread on Facebook (and registered on Google Trends as popular searches), but a version shared to Reddit’s r/WhitePeopleTwitter (titled “The cruelty is the point”) garnered significant engagement:
Any chance this is real?
Did you save the source for that? I can't find anything on it and I absolutely would love something to link that said that to chuds and shit
— Lesbian Spider Creature (@Eldritch_Derg) October 21, 2021
The 2020 fsa report starting on page 169
— Max Has Nightmare Eyes (@chaoticgaythey) October 21, 2021
The 2020 fsa report starting on page 169
Or this handy chart on pg 48 with the explanation paragraph which directly shows even the most generous free college proposal put forward by Sen. Sanders is cheaper than what we spend on this Rube Goldberg machine of economic suffering.
Edit – the U.S. never misses a chance to twirl its mustache in cartoon villainy at the working class. Of course it’s real. Just like the story of the Texas jail that spent a decade and $23k in legal fees to keep an inmate from getting a hypoallergenic blanket.
Complicating the discussion across platforms was the fact that a specific document — the “2020 fsa report starting on page 169” — was referenced, but infrequently linked. In instances where the document [PDF] was linked, the page numbers printed on the document itself did not directly correspond with the PDF viewer’s numbering. (In the context of the source material, “FSA” was “Federal Student Aid.”)
That reference was also presented in screenshot form:
I believe this is the page you’re looking for: pic.twitter.com/pOOkcSdclQ
— Alan Grove (@alangrove) October 21, 2021
That chart [Figure 22] appeared on page 47 by the document’s numbers, and page 63 on the linked version. At the top, a section about “gross costs” highlighted by another Twitter user appeared:
Statement of Net Cost
The Statement of Net Cost is the federal financial statement that presents the net cost of operations for FSA programs. FSA’s net cost is the gross cost incurred during its operations less any exchange (i.e., earned) revenues earned from its activities. Gross cost is composed of the cost of credit programs, grant programs, and operating costs. Exchange revenues are primarily interest earned on credit program loans.
Underneath the chart [Figure 22], text read:
As shown in Figure 22, FSA’s earned revenues (mainly interest and fee accruals net of subsidy amortization) increased from $34.2 billion in FY 2016 to $39.4 billion in FY 2020, an overall increase of 15.2 percent or about 3.8 percent annually on average. By comparison, FSA’s gross costs fluctuated much more widely over the same period, from $93.0 billion in FY 2016 to $171.2 billion in FY 2020, mainly as the result of subsidy-related transactions. As a result, net costs fluctuated also, most notably increasing 22.0 percent from $108.1 billion reported in FY 2019 to $131.8 billion in FY 2020. FSA’s total costs exceeded its earned revenues in both years, but the margin was greater in FY 2020 by $23.7 billion, of which $39.4 billion was attributable to the Direct Loan Program, largely offset by the $10.6 billion decrease in FFEL net costs.
For the Direct Loan Program, the $39.4 billion increase in net costs was primarily the result of an increase in subsidy transfer modifications ($39.6 billion). Similarly, the $10.6 billion decrease in FFEL Program net costs was mostly the result of a $10.3 billion increase in gross costs.
Both the FFEL and Direct Loans Programs are mandatory programs whose costs are largely driven by Federal borrowing costs, prevailing interest rates, in-school interest benefits for borrowers, the costs related to borrower defaults, and loan volume demand. The programs are funded by mandatory and indefinite budget authority and therefore do not receive annual appropriations. For more details regarding the inherent difficulty of estimating the impact of these complex factors, please refer to Note 5.
None of the discourse on either thread seemed to pinpoint the origin of the claim that U.S. student loans cost more than $60 billion more to maintain than they bring in every year. However, subtracting the italicized “$34.2 billion” in earned revenues in FY [fiscal year] 2016 from “gross costs … of $93.0 billion in FY 2016” yielded a similar and reasonable to round up figure of $58.8 billion.
Were that the case, presumably the original poster used figures from 2016 versus 2020 due to the atypical events of FY 2020 and its known effects on student loan costs and revenues. Subtracting the $39.4 billion in FSA earned revenues from FY 2020 from the FSA gross costs of $171.2 billion resulted in a difference of $131.8 billion.
On page 48 of the document, a “Statement of Changes in Net Position” section further explained the cited figures (with figures in parentheses being negative sums):
The Statement of Changes in Net Position presents those amounts that caused the net position section of the Balance Sheet to change from the beginning to the end of the reporting period and is affected by changes in its two components, cumulative results of operations and unexpended appropriations.
FSA’s net position as of September 30, 2020, was negative $19.4 billion, an increase of $25.5 billion compared to the previous September 30 [FY 2019] net position. The difference reflects an increase in the cumulative results of operations by the amount of $21.9 billion, from $(76.3) billion, to $(54.4) billion, of which $(8.0) billion of the increase related to the Direct Loan Program and $(14.0) billion was attributable to the FFEL Program. In addition, unexpended appropriations increased by $3.6 billion, of which $2.9 billion were attributable to the combined Perkins Loan and Grants Programs, with the $0.9 billion increase in Direct Loan Program unexpended appropriations accounting for most of the remaining difference.
So popular was the tweet and screenshots of it that the discussion spilled over to one of Reddit’s stringently-monitored “ask” subreddits, r/AskEconomics:
One of the subreddit’s moderators (u/UpsideVII) responded to the question (making the rare distinction of indicating the document’s page numbers did not align with the PDF’s page numbering system). In their response, u/UpsideVII acknowledged the same issue we encountered — that nowhere in the document or elsewhere could we locate a firm figure for the cost of servicing student loans:
Yea, subsidized student loans run at a net loss for the government. That’s essentially the definition of subsidized.
For a legit source, you can see the 2020 Fiscal Year Annual Report for the FSA. There’s a nice chart of net costs on page 47 (pdf page 63).
The tweet makes a particular claims the cost of servicing are greater than the revenue. If this were true, the statement would be correct.
But the tweet is misinterpreting the net cost figure (which I believe comes from the 2019 DLP heading on pdf page 186) as the cost of servicing loans.
The report doesn’t tell us anything, as far as I can find, about the cost of servicing loans. So maybe it’s possible it’s true (although based on the numbers above it would require servicing costs to be more than 1/3 the total costs of making a loan which seems wildly implausible). At the very least, the $60 billion number is definitively wrong.
Finally, additional commentary pointed to recent news articles (from September 30 and October 6 2021, respectively), which reported that a third federal student loan servicer, Navient, planned to discontinue servicing federal student loans. The second of the two linked articles included a “key takeaway,” emphasized below:
Servicers say it’s hard to make money in the federal student loan business, while some borrowers have complained their servicers are confusing and negligent … Navient, which manages the accounts of 5.5 million federal student loan borrowers, said [in late September 2021] it would be transferring that part of its business to Maximus Federal Services, which also handles federal student loans that are in default. Navient, which also has a private student loan business, anticipates the deal going through before the end of the year, though it still has to be approved by the government. The servicer first indicated plans to stop working with the Department of Education in July 2020, but the timing of the transition was unclear.
Navient, once part of Sallie Mae, is the third servicer of federal student loans to bow out in recent months [in 2021], adding a layer of complication to an even bigger transition coming up in February . That’s when nearly 43 million borrowers, with $1.6 trillion in outstanding federal student loans, will have to start paying on them again. A pandemic provision that’s given borrowers forbearance since March 2020 is set to expire on Jan. 31 .
In the second linked article, Yahoo addressed Navient’s exit from student loan servicing:
Navient has long been in the crosshairs of advocates and progressive lawmakers who believed the company was responsible for shoddy servicing, such as steering student loan borrowers into high-cost repayment plans or for deceptive practices from New Jersey to Washington.
Its departure was welcomed.
“Navient has spent decades misleading, cheating, and abusing student borrowers. The Federal student loan program will be far better off without them,” Senator Elizabeth Warren (D-MA) said in a statement.
“Ultimately, the student loan system is broken,” she continued. “The only way to guarantee that borrowers do not face the same predatory behavior from Navient’s replacement is to cancel student debt, so that no borrower’s future is held hostage by corporations profiting off their financial distress.”
On October 18 2021, CNBC reported further developments in the apparently chaotic student loan servicing news genre:
On Friday [October 15 2021], the Department of Education’s Federal Student Aid office announced a stricter set of standards for student loan servicers, the companies the government pays to oversee the billing and collection of student loan payments.
“FSA is raising the bar for the level of service student loan borrowers will receive,” said FSA Chief Operating Officer Richard Cordray in a statement. “Our actions come at a critical time as we help borrowers prepare for loan payments to resume early next year. The great work done by our negotiating team here enables us to ensure that loan servicers meet the tougher standards or face consequences.”
In the past, servicers have been accused of harassing borrowers, misleading borrowers about their options, mismanaging the public service loan forgiveness program and poor customer service.
The new changes are intended to “ensure a smooth transition for borrowers out of the student loan pause ending on Jan. 31, 2022” and also come during a significant re-shuffling among servicers.
A very popular tweet claiming that U.S. student loans cost the government “over $60B more to service than they bring in a year” spread from Twitter to Reddit and Facebook, purportedly based on Fiscal Year 2020 Annual Report | Federal Student Aid (PDF); citations and references to the document were further complicated by inconsistent page numbering. Although many readers shared the content on, some requested sources or attempted to validate the $60 billion figure in the ensuing discussions. As one moderator of r/AskEconomics observed (which matched our own observations) the report did not offer any information about the cost of servicing loans. We were unable to locate any official information about the cost of servicing student loans either, despite the fact the document itself numbered no fewer than 250 pages (and that existing servicers like Navient were exiting the business at a rapid clip). Without a benchmark for the cost of student loan servicing to contrast with the provided figures, we can only rate the claim Unknown.