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CBO: Analysis of the Subsidy Costs of Direct and Guaranteed Student Loans

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Analysis of the Subsidy Costs of Direct and Guaranteed Student Loans – July 27, 2009 – Letter to the Honorable Judd Gregg

  • “The Federal Family Education Loan Program (FFELP) provides federal guarantees for loans made to students by private lenders and is the predominant source of loans for higher education; the Budget Office (CBO) projects that, under current law, guaranteed loans will account for 70 percent of all new direct and guaranteed student loans made over the next 10 years…In its July 24, 2009, cost estimate for H.R. 3221 (the Student Aid and Fiscal Responsibility Act of 2009, as approved by the House Committee on Education and Labor), which would incorporate the President’s proposal, CBO estimated that replacing new guarantees of student loans with direct lending would yield gross savings in federal direct (or mandatory) spending of about $87 billion over the 2010–2019 period.”
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