For example, results from a 2019 analysis by McKinsey consultants to assess the value and credit profile of the Direct Loan portfolio “were not good: an estimated 45 percent of loans in the portfolio were not expected to ever be repaid,” said the Project on Predatory Student Lending, a legal organization that represents student borrowers.”

“Eileen Connor, executive director of the Project on Predatory Student Lending, which has frequently sued the Education Department on behalf of borrowers, said she’s skeptical the administration could strike a deal that benefits both taxpayers and borrowers.

One thing is clear: inflated valuation flows from distorted incentives, with borrowers and taxpayers bearing the brunt. Sale or not, it’s time for lawmakers to have an honest conversation about the actual cost of the federal student loan program.