Average college tuition has skyrocketed 180% in the past 20 years, far outpacing inflation. Now, every working American, even those who never took a student loan, is subsidizing borrowers and their $1.7 trillion debt. The tab works out to up to $5,000 per taxpayer over the next decade. New rules to address the crisis are set to kick in next July. Scott Thuman reports.

The following is a transcript of a report from “Full Measure with Sharyl Attkisson.”
Watch the video by clicking the link at the end of the page.

Last Fourth of July, amid patriotic symbols and celebration, President Trump signed his One Big Beautiful Bill.

While tax cuts and healthcare dominated the headlines, there were also big changes for anyone with a student loan. impacting all Americans’ wallets because federal student loans are funded by taxpayer dollars.

Federal student loan debt in America stands at just under $ 1.7 trillion. 42.5 million Americans have loans, owing an average of $39,000 each.

Preston Cooper is a PhD economist with the American Enterprise Institute, a DC-based public policy organization.

Scott: $1.7 trillion, that is a staggering amount that is owed to the federal government, or in reality, to all Americans. Is that ever going to get repaid?

Preston Cooper: Well, it’s possible that a portion of that will not be repaid, but the good news is that in the one big beautiful Bill Act, there is a new repayment plan available to students that will enable them to pay off their debts faster.

For new students, the new plans kick in July next year. There will be fewer options, and those on income-based repayment plans will see the biggest changes.

Scott: What about President Biden’s plan of forgiveness? I know that got mired in the courts. Where does that stand now?

Preston Cooper: So, President Biden’s loan forgiveness plan has been struck down by the courts multiple times now. I would not be counting on loan forgiveness. I think that’s just not going to happen in the near future, especially under the current administration.

Scott: All the changes that are coming, what will that mean for taxpayers?

Preston Cooper: So taxpayers are expected to save around $300 billion over the coming 10 years due to the changes to student loans // Most of that is from repealing President Biden’s plan that had the $0 monthly payments, the save plan, but some of the other changes will also contribute to savings as well.

Scott: So, between the repayment pauses of the pandemic and President Biden’s administration, it’s been years since a lot of borrowers have made their payments.

Preston Cooper: That’s right. So it has been five years since many borrowers have made a payment on their loans because of the payment pause. Some borrowers have never made a payment at all, and we’re seeing in the data that lots of borrowers are actually not making payments on their loans right now, that the repayment rate is below 50%.

Scott: They’re defaulting.

Preston Cooper: So if borrowers don’t pay for an extended period of time, they’ll enter default on their loans, and that means that the government is then empowered to garnish your wages. They are empowered to seize your tax refund, your social security benefit. It’s going to be a massive hit to your credit score. That is not a situation that you want to end up in.

Scott: What other changes are on the way?

Preston Cooper: There are going to be new limits on how much students can borrow going forward. Because right now colleges have taken advantage of these unlimited student loans basically to increase tuition and pass the cost onto students and eventually onto taxpayers.

Scott: But is that an incentive for universities to consider lowering tuition?

Preston Cooper: So if students cannot borrow for the full cost of attendance anymore, there’s no longer that blank check for universities to charge whatever they want and then pass the cost on to students and taxpayers schools are going to have to make some tough decisions about how to limit tuition to make sure that students can borrow within the new limits that Congress has set out.

Scott: You study this, you understand it perhaps better than most would. If somebody asks you, what do you think of the process these days?

Preston Cooper: I would say the process is broken. Student loans can be a valuable tool to help students afford their education if they are used responsibly on the part of the student and the part of the college. But too often we’ve seen student loans go out the door to students who have very little hope of paying them back. // So there are too many aspects of the system, which simply are broken right now. But I am optimistic that we have started to take some steps towards fixing that.

Sharyl (on camera): As for who’s making money by the over-inflated college tuition and loans: Private companies that act as loan servicers earn billions in taxpayer-funded fees, and colleges rake in the inflated tuition revenue fueled by easy federal lending.

Watch video here.