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Direct Government Lending: The Bottom Line. A Critique of GAO's Report on Guaranteed Student Loans versus Direct Lending and Revised Savings Estimates.

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Bibliographic Details
Title: Direct Government Lending: The Bottom Line. A Critique of GAO's Report on Guaranteed Student Loans versus Direct Lending and Revised Savings Estimates.
Language: English
Authors: Quick, Perry D., Ernst & Young, Washington, DC.
Availability: Public Affairs Office, USA Group, Inc., P.O. Box 6180, Indianapolis, IN 46206-6180.
Peer Reviewed: N
Page Count: 10
Publication Date: 1993
Sponsoring Agency: USA Group, Inc., Indianapolis, IN.
Intended Audience: Administrators; Policymakers; Practitioners
Document Type: Reports - General
Descriptors: Budgeting, Comparative Analysis, Cost Effectiveness, Evaluation, Federal Aid, Financial Support, Higher Education, Paying for College, Postsecondary Education, Student Financial Aid, Student Loan Programs
Laws, Policies and Program Identifiers: Family Education Loan Program
Abstract: This report addresses the dollar savings described in the Government Accounting Office's (GAO) report supporting direct lending as opposed to the present guaranteed student loan program. The critique explains the changes in the GAO model assumptions and projections that are believed necessary to move from the original $4.8 billion savings to a more reasonable figure. The new figure reflects: (1) 1992 amendments to the Higher Education Act; (2) the current interest rate and inflationary outlook; and (3) more reasonable assumptions about how the shift to direct lending will affect financial markets, educational institutions, student behavior, loan flows, and processing and servicing activities. The updated and revised estimates suggest that the shift from the current guaranteed student loan program to direct lending would generate essentially zero budgetary savings; in fact, it suggests that a $13 million loss, in present value terms, over the 5-year budget period could be experienced. (GLR)
Entry Date: 1993
Accession Number: ED356726
Database: ERIC
Description
Abstract:This report addresses the dollar savings described in the Government Accounting Office's (GAO) report supporting direct lending as opposed to the present guaranteed student loan program. The critique explains the changes in the GAO model assumptions and projections that are believed necessary to move from the original $4.8 billion savings to a more reasonable figure. The new figure reflects: (1) 1992 amendments to the Higher Education Act; (2) the current interest rate and inflationary outlook; and (3) more reasonable assumptions about how the shift to direct lending will affect financial markets, educational institutions, student behavior, loan flows, and processing and servicing activities. The updated and revised estimates suggest that the shift from the current guaranteed student loan program to direct lending would generate essentially zero budgetary savings; in fact, it suggests that a $13 million loss, in present value terms, over the 5-year budget period could be experienced. (GLR)