Accurate, Focused Research on Law, Technology and Knowledge Discovery Since 2002

You Are Here: Home » Government Documents » CBO: Costs and Policy Options for Federal Student Loan Programs

CBO: Costs and Policy Options for Federal Student Loan Programs

by on

Costs and Policy Options for Federal Student Loan Programs, March 2010

  • “The federal government helps students finance higher education through two major loan programs—one that guarantees loans made by private lenders and one that makes loans directly to borrowers. The two programs offer similar types of loans on similar terms to borrowers, but they differ significantly in how they are funded and administered. Those differences cause the guaranteed loan program to have a significantly higher rate of federal subsidies—as calculated for the federal budget under the rules of the Federal Credit Reform
    Act—than the direct loan program has. However, such subsidy-rate estimates do not include the costs to taxpayers that stem from the risks involved in making student loans, nor do they include federal administrative costs (which are recorded separately in the budget). More comprehensive, fair-value estimates, which include such costs, indicate higher subsidy rates for both programs, although direct loans continue to show a marked cost advantage over guaranteed loans. This Congressional Budget Office (CBO) study—prepared at the request of the Ranking Member of the Senate Budget Committee—compares the budgetary and fair-value costs of the federal student loan programs.”
    • LinkedIn

    Sorry, comments are closed for this post.