The U.S. national debt crossed $40 trillion on Aug. 18, a record high — a milestone that sounds abstract until it is converted into something familiar: loan payments and benefit checks.

New economic modeling from The CEO Center, the public policy arm of The Conference Board, attaches a dollar figure to what rising federal borrowing actually costs four ordinary Americans: a student paying off loans, a family saving for a house, a small-business owner financing expansion, and a retiree counting on Social Security. The headline finding: the gap between a responsible deficit path and a reckless one is worth tens of thousands of dollars over a decade — and jumps to six figures in a true fiscal crisis.

How the debt reaches household balance sheets

Divide $40 trillion by the U.S. population and every American is on the hook for roughly $117,000. That figure alone does not explain why the debt matters to someone who will never personally owe the Treasury a cent.

The chain of cause and effect works like this: when the federal government runs a bigger deficit, it sells more bonds to cover the gap. Investors, wary of a less creditworthy borrower, demand higher interest rates on those bonds. That concern is no longer abstract: Fitch stripped the U.S. of its AAA rating in 2023, and Moody's — the last of the big three agencies to hold the top grade — followed in May 2025. Because student loans, mortgages, and small-business loans are all priced off the same benchmark — the 10-year Treasury yield — the government's higher borrowing costs flow directly into the interest rates on everyone else's debt.

The feedback loop is already visible in the federal budget itself, where net interest on the debt overtook annual defense spending in fiscal 2024, making interest one of the government's largest single line items.

The Conference Board modeled five versions of the next decade:

• A baseline matching current Congressional Budget Office projections, with deficits of 6%–7% of GDP.
• A "good case" in which Washington cuts the deficit to 3% of GDP.
• A "bad case" in which the deficit balloons to 9%.
• A scenario simulating a one-week government default in 2029.
• An extreme shock in which interest rates double to 1980s levels.

Under the current baseline, debt as a share of GDP climbs to 154% by 2036. If lawmakers get serious about cutting deficits, it settles at 126%. A more reckless spending path puts it at 180%. For scale, the highest ratio in U.S. history was about 106%, recorded just after World War II, and the country has already climbed back to roughly 100% — meaning every modeled path pushes past the postwar record. The default scenario is not pure imagination, either: the 2023 debt-ceiling standoff brought the Treasury within days of running out of cash before an 11th-hour deal.

The student: up to $20,000 more by graduation

Take a high schooler heading to a four-year university in 2028, borrowing $45,000 for undergrad and another $30,000 for a two-year graduate program in 2032. Federal loan rates are pegged to the 10-year Treasury yield plus a fixed margin — 2.05 percentage points for undergraduate loans and 3.6 points for graduate loans — locked in whenever the loan originates.

Under the baseline scenario, that student repays $103,645 over a standard 10-year term. If Congress gets deficits under control, the bill drops to $102,776, saving roughly $870. If deficits worsen instead, it rises to $104,648. A one-week government default in 2029 would push it to $106,495.

The harshest outcome is the extreme rate-shock scenario, which drives total repayment to $123,736 — nearly $20,000 more than the baseline.

The family of four: waiting to buy a house gets more expensive, not less

A family targeting a $600,000 home with a 20% down payment and a 30-year fixed mortgage faces a similar squeeze — one that compounds the longer they wait.

Buying in 2031, the gap between the good-case and bad-case scenarios is about $25,000 in total mortgage payments. Push the purchase to 2036, and rising deficits widen the gap further: the family pays $24,000 more than baseline in the bad-case scenario, and a staggering $200,000 more — a 19.2% premium — if an extreme rate shock hits. The one-week default scenario alone tacks on $45,000 by 2036.

That is money competing directly against costs already squeezing this household. Center-based childcare now averages $15,570 a year and is rising 1.5 times faster than inflation, while long-term care for an aging parent can run anywhere from $75,000 a year for a home health aide to over $128,000 for a private nursing home room.

The small-business owner: financing growth costs more when Washington borrows more

A small-business owner planning two expansion loans — $100,000 in 2031 and $150,000 in 2036, each priced at the 10-year Treasury yield plus a 2% bank premium — pays $334,747 in total under the baseline.

Deficit reduction saves about $6,300; a bad-case deficit path costs about $6,500 more. A government default adds $20,000. The extreme rate shock is the worst outcome across any case study in the report: $65,000 more than baseline, a 19.5% increase, arriving at a moment when small-business profitability is already falling and gas costs for small businesses are up 31% year over year.

The retiree: no interest rate, just a shrinking check

The fourth case study works differently because there is no loan to reprice. Instead, it turns on Social Security's Trust Fund, which the CBO projects will run out of reserves in 2032 — a more pessimistic date than the program's own trustees, whose annual report puts depletion at 2034. By law, once that happens, benefits automatically drop to whatever payroll tax revenue can cover unless Congress intervenes.

A retiree scheduled to receive $2,466 a month in 2032 would instead get $2,293 — a $173 cut — and by 2036 the shortfall widens to $754 a month.

Congress could avoid the cuts by transferring roughly $2.7 trillion from the general fund between 2032 and 2036. But doing so would add directly to the deficit, pushing the country further toward the bad-case scenario and, by extension, higher costs for the student, the family, and the small-business owner in the other three case studies. There is no version of this in which the bill simply disappears; it just moves to a different balance sheet.

The bottom line

Three of the four Americans in this analysis pay more in interest because Washington is borrowing more. The fourth pays through a smaller retirement check, because the money needed to keep it whole would have to come from more of the same borrowing.

The report's authors argue that reframing the debt this way — not as a distant trillion-dollar abstraction, but as a line item on a 22-year-old's student loan bill or a 67-year-old's Social Security deposit — is what has been missing from the political conversation.

The CEO Center is pushing Congress to establish a bipartisan fiscal commission, overhaul Social Security financing, modernize Medicare payment models, and reform the federal budget process. Whether lawmakers act may determine which of the report's five debt scenarios — and which version of these four Americans' bills — actually plays out.

For this story, Fortune journalists used generative AI as a research tool. An editor verified the accuracy of the information before publishing.

This story was originally featured on Fortune.com.