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ERIC Number: ED260672
Record Type: Non-Journal
Publication Date: 1985-Jun
Pages: 22
Abstractor: N/A
Reference Count: N/A
ISBN: N/A
ISSN: N/A
Federal Costs for Student Loans: Is There a Role for Institution-Based Lending?
Hauptman, Arthur
Federal costs of the National Direct Student Loan (NDSL) program and the Guaranteed Student Loan (GSL) program are compared, and alternatives to the current system of student financial assistance are discussed. It is estimated that over the life of the loan, the long-term federal costs of GSL and NDSL per dollar loaned are approximately the same under current policies. Both NDSL and GSL cost the federal government slightly less than 50 cents for every dollar loaned over the life of the loan assuming moderate future market interest rates. Four possible modifications to NDSL are addressed: raising the interest rate for borrowers, reducing the federal share of capital, requiring the use of private sector loan servicing agencies to reduce the incidence of default, and eliminating the existing loan cancellation provisions for certain kinds of teaching and military service. It is projected that these modifications would reduce federal costs for NDSL over the life of the loan by 17 cents per dollar loaned, or roughly 35 percent of the long-term federal costs at moderate levels of market interest rates. It is advocated that the sources of capital for students loans should be diversified to reduce the possible consequences of large-scale withdrawal from the GSL program. (SW)
American Council on Education, Division of Policy Analysis and Research, One Dupont Circle, N.W., Suite 800, Washington, DC 20036-1193 ($8.00 nonmembers; $5.00 members).
Publication Type: Reports - Descriptive
Education Level: N/A
Audience: N/A
Language: English
Sponsor: EXXON Education Foundation, New York, NY.
Authoring Institution: American Council on Education, Washington, DC. Div. of Policy Analysis and Research.
Identifiers - Laws, Policies, & Programs: Guaranteed Student Loan Program; National Direct Student Loan Program