Honorable Richard Burr and Honorable Virginia Foxx
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1
A present value is a single number that expresses a flow of current and future income or payments in
terms of an equivalent lump sum received or paid at a specific time. The value depends on the rates of
interest, known as the discount rates, used to translate future cash flows into current dollars.
2
FCRA specifies the discount rates as the rates on Treasury securities with similar terms to maturity.
3
For details about the plans for debt cancellation, including the types of loans that are eligible, see
Alexandra Hegji, The Administration’s Newly Announced Student Loan Debt Cancellation Policy,
Report IN11997, version 4 (Congressional Research Service, September 12, 2022),
https://tinyurl.com/yc27b3cj. Borrowers are eligible if their annual income in 2020 or 2021 was less
than $125,000 (for individuals or married borrowers who file their federal income taxes separately) or
$250,000 (for married couples filing jointly or heads of households). Current dependent students will
be eligible for cancellation on the basis of parental income.
4
The Administration has estimated the dollar reduction in repayments from 2023 to 2032; for the sake
of comparison, CBO has translated that estimate to an average percentage of GDP (using its May
2022 projection of GDP): 0.08 percent. See Office of Management and Budget, “Assessing Debt
Relief’s Fiscal and Cash-Flow Effects” (The White House Briefing Room Blogs, August 26, 2022),
https://tinyurl.com/4hyktz4h. CBO also estimates that repayments will be reduced by an average of
0.08 percent of GDP over that period.
5
In 2023, CBO estimates, cash flows to the Treasury will be reduced by about 0.2 percent of GDP
because of the executive actions. About two-thirds of that amount is estimated to occur for reasons
other than the reduction in repayments: refunds of previous payments to borrowers who made
payments during the pandemic (when the requirement for payments was suspended) on debt that will
be canceled under executive action, as well as outflows for consolidation loans, for borrowers who
consolidate private loans obtained through the Federal Family Education Loan program so that their
debt will be canceled under executive action. The initial consolidation of private loans into direct
federal loans will increase federal debt held by the public but not federal debt net of financial assets,
because the federal government will acquire assets equal in present value to their cost.
6
For information about how the volume of student loans has changed over time, see Congressional
Budget Office, The Volume and Repayment of Federal Student Loans: 1995 to 2017 (November
2020), www.cbo.gov/publication/56706.
7
For a technical description of CBO’s modeling, which was originally developed to analyze income-
driven repayment plans, see Nadia Karamcheva, Jeffrey Perry, and Constantine Yannelis, Income-
Driven Repayment Plans for Student Loans, Working Paper 2020-02 (Congressional Budget Office,
April 2020), www.cbo.gov/publication/56337.