ERIC Number: ED228949
Record Type: RIE
Publication Date: 1983-Feb
Reference Count: 0
Study of Procedures to Eliminate the Guaranteed Student Loan In-School Interest Subsidy. Report No. 2.
National Commission on Student Financial Assistance, Washington, DC.
Proposals for the amendment or elimination of the in-school interest subsidy for the Guaranteed Student Loan (GSL) program were evaluated. The proposals were assessed in terms of their effects on the administrative and operational aspects of the GSL program, the availability of loan capital, and their impact on borrowers' ability to meet their repayment obligations. The proposals fall into four categories: borrower paying of interest while in school; accrual and deferral of in-school interest; immediate payment of in-school interest through additional borrowing (Domenici plan); and recapture, during the repayment period, of the federal in-school interest payment from the borrower (Metzenbaum proposal). It was concluded that the elimination of the in-school interest subsidy would seriously erode the capital supply for the GSL program. Experiences of various states with nonsubsidized loan programs indicate that students will have great difficulty in meeting interest payment obligations during their in-school years. It is recommended that the GSL in-school interest subsidy be retained in its current form. The basic data source for the analysis is described, as are previous studies on student loan defaults (Cresap Study, Kuch Report, and the Educational Policy Research Institute Model Report). (SW)
Publication Type: Reports - Evaluative
Education Level: N/A
Sponsor: Congress of the U.S., Washington, DC.
Authoring Institution: National Commission on Student Financial Assistance, Washington, DC.
Identifiers: Guaranteed Student Loan Program; National Comm on Student Financial Assistance