ERIC Number: ED412827
Record Type: Non-Journal
Publication Date: 1993
Direct Loans. An Assessment of the Clinton Administration's Proposals and Some Suggestions for Improvement. AGB Public Policy Series, No. 93-1.
Hauptman, Arthur M.
Association of Governing Boards of Universities and Colleges
In 1992 the Clinton Administration proposed phasing out the federally guaranteed student loan program and replacing it with a direct lending program run entirely by the federal government, claiming that this approach would save taxpayer money and simplify a complex program. Opponents of the Administration plan argued instead for changes in federal laws so that budget targets set in 1994 would be met. Another approach, however, is suggested in this paper: setting up a competitive federal student loan system that would allow lenders to compete with the federal government in making new loans to students, and allow the federal government to compete with the private sector in buying up privately financed loans through secondary markets. At the end of a phase-in period, the final decision would be based on the experiences of both the federal government and direct lenders. Three additional ways to strengthen the Administration's proposal were also suggested: (1) using savings from reduced profits to cut the interest rate to borrowers and eliminate the insurance premium; (2) consolidating the number of federal student loan programs; and (3) restructuring guaranty agencies by making them agents of the federal government. An appendix examines whether direct government lending will save the federal government money. (DM)
Descriptors: Access to Education, Educational Finance, Federal Aid, Federal Programs, Federal Regulation, Government Role, Higher Education, Income Contingent Loans, Loan Repayment, Parent Financial Contribution, Paying for College, Pilot Projects, Politics of Education, Private Financial Support, Public Policy, Student Financial Aid, Student Loan Programs, Tax Rates
Association of Governing Boards of Universities and Colleges. 1133 20th Street NW Suite 300, Washington, DC 20036. Tel: 800-356-6317; Tel: 202-296-8400; Fax: 202-223-7053; Web site: http://www.agb.org
Publication Type: Opinion Papers; Reports - Evaluative
Education Level: N/A
Audience: Administrators; Practitioners
Authoring Institution: Association of Governing Boards of Universities and Colleges, Washington, DC.
Identifiers - Laws, Policies, & Programs: Federal Direct Student Loan Program; Higher Education Act Amendments 1992