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ERIC Number: ED341340
Record Type: Non-Journal
Publication Date: 1992-Jan-6
Pages: 37
Abstractor: N/A
Reference Count: N/A
Stafford Student Loans: Lower Subsidy Payments Could Achieve Savings without Affecting Access. Report to Congressional Committees.
General Accounting Office, Washington, DC. Div. of Human Resources.
Looking for ways to save money within the Stafford Student Loan program, a study was done to measure the effect that a lower special allowance could have on the supply of Stafford loans made with private capital. The special allowance is an incentive payment to commercial lenders who participate in guaranteed student loan programs. The study used a multiple regression analysis that focused on the relationship between commercial lenders' rates of return and the supply of Stafford loans they financed. This allowed the study to predict the commercial supply of Stafford loans that corresponds to lower special allowances. Results of the study indicated that a lower special allowance should cause little change in commercial lending, that such a reduction would mean significant program savings, and would result in more loans by fewer lenders. This could be done while not adversely affecting the Stafford loan program's reliance on loan capital supplied from the private market, attenuating students' access to subsidized loans, or discouraging most lenders from participating. It was estimated that a special allowance reduction to 3 percent would result in about a 1 percent decrease in projected commercial loan volume. Appendixes contain details of the statistical methodology and regression models. (JB)
U.S. General Accounting Office, P.O. Box 6015, Gaithersburg, MD 20877 (First copy free, additional copies $2.00).
Publication Type: Reports - Evaluative
Education Level: N/A
Audience: Policymakers
Language: English
Sponsor: N/A
Authoring Institution: General Accounting Office, Washington, DC. Div. of Human Resources.
Identifiers - Laws, Policies, & Programs: Stafford Student Loan Program