GAO Study: Loan Repayment Imperfect Science

GAO Study: Loan Repayment Imperfect Science

It’s practically impossible to figure out the costs to the taxpayer of student loans. So says the Government Accountability Office, which compared cost estimates and re-estimates of the Federal Family Education Loan Program and the Federal Direct Loan Program for 11 years. In most years, estimates proved lower than actual costs, but FFELP has been higher in the last three years, GAO reported in “Federal Student Loans: Challenges in Estimating Federal Subsidy Costs.”

Cost estimates varied because the actual number of loans varied from predictions and rates changed. And the picture gets more complicated because cost estimates don’t include administrative expenses, risks and tax revenues paid by lenders.

Congressional Republicans expressed frustration about the lack of information. “This lack of accurate accounting further confirms that making policy decisions, like an expansion of direct lending, based on unreliable data, would be fundamentally bad public policy,” says U.S. Rep. Pete Hoekstra, R-Minn.



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