The flow of capital to and through the Guaranteed Student Loan (GSL) Program and the cost of that capital to the federal government and the individual borrower were studied. A review of the research on student loan capital was conducted, and automated cost models were developed to test assumptions and project future costs. Attention was directed to federal direct and indirect program costs and to offsets to federal costs. The role of each of the following participants in the GSL program was also examined: private lenders, federal government, state direct lenders and secondary markets, state guarantee agencies, private educational institutions, Student Loan Marketing Association, and underwriters. Although the program has been successful, federal expenditures have continued to increase. Direct costs included: special allowance, federal interest subsidy, federal reinsurance, insurance, administrative cost allowance, federal advance, and penalty interest. Indirect costs (in the order of 1982 magnitude) were: federal financing costs, tax-exempt bond subsidy, and program administration and overhead. Appended materials include cost data, major cost allocation assumptions, federal cost model descriptions, and a bibliography. (SW)