The Biden-Harris administration’s lending spree is about to hand U.S. taxpayers a hefty $65 billion tab in lifetime costs from loans and guarantees issued in Fiscal Year 2025, according to the CBO. For anyone paying attention, that’s almost double the risk costs seen in 2020, the last fiscal year before Biden took office. A mere coincidence? Hardly. This surge didn’t just happen by chance—it’s the direct result of policy choices designed to pump out loans and forgiveness programs at a record pace, with taxpayers footing the bill for years to come.
In a classic example of “fiscal genius,” the administration rolled out policies like the Inflation Reduction Act and its student loan forgiveness plan, both of which are doing a stellar job at, well, inflating the nation’s debt. The CBO points out that these initiatives have not only ramped up loan issuance but—surprise, surprise—are also boosting the amount of debt that’s destined to go unpaid. Because what’s more American than dishing out loans with no intention of collecting?
Take student loans, for example, which account for a sizable chunk of these anticipated losses. Of the $65 billion expected to evaporate into the fiscal ether, roughly $22.1 billion of it will come from student debt that will go unpaid. This is courtesy of the administration’s shiny new SAVE Plan. This particular stroke of financial genius cut undergraduate loan payments from 10% to 5% of a borrower’s discretionary income and will even forgive loans for those with an original balance of $12,000 or less. In other words, about a quarter of all student debt issued next year is effectively on the fast track to disappearing into the void.
But hold on, there’s more! The Department of Energy (DOE) couldn’t resist joining the fiscal fun. DOE loans are expected to pile on an additional $13.5 billion in losses, with nearly a quarter of their new loans and guarantees headed straight for the red. For context, before the Inflation Reduction Act, energy lending was such a non-factor that the CBO didn’t even bother tracking it. Fast forward to $370 billion later in climate spending, and suddenly, DOE loans have skyrocketed in importance—and, predictably, in their capacity to flop.
Even these sky-high figures might be the tip of the iceberg. There’s a dark horse in this race of fiscal disaster, and it’s wearing the logo of the Federal Housing Administration (FHA). According to a November 2023 FHA press release, the agency has been waiving or reducing mortgage payments for nearly 2 million homeowners since 2021, effectively putting a band-aid on potential defaults. These mortgages account for around a quarter of the FHA’s 7.5-million-home portfolio, which means the actual losses from this program could end up being even more devastating than what the CBO has predicted. It’s a ticking time bomb, just waiting for the right moment to detonate.
If the fiscal fiasco wasn’t grim enough, let’s talk about the ever-ballooning U.S. national debt. As of September 9, 2024, the country’s debt hit a staggering $35.34 trillion, up from $27.75 trillion when Biden took office in January 2021. In case you’re keeping score, that’s an almost $8 trillion surge in just a few short years.
Just in case you’re curious, that looming $65 billion loss is being calculated under the Federal Credit Reform Act of 1990, which conveniently overlooks the market risk, or the “fair value,” of these loans. Translation: the government’s estimate is already sugarcoated, and the real losses could be even worse than what’s officially on the books.
In comparison, during the Trump administration, federal lending programs seemed downright frugal. The lifetime loss on loans from that era pales in comparison to the Biden-Harris administration’s forecasted financial hemorrhaging. But don’t worry, this administration has everything under control — or so they say.
Speaking of saying things, the White House, unsurprisingly, had no immediate comment on this mess. Whether they’ll acknowledge the staggering costs their loan programs are dumping on taxpayers is yet to be seen. But if history is any indicator, we can expect more spin, more excuses, and more debt because nothing says “building back better,” like driving the country further into the financial abyss.