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ERIC Number: ED496554
Record Type: Non-Journal
Publication Date: 2006-May
Pages: 24
Abstractor: ERIC
The Cost of the Consolidation Option for Student Loans. A CBO Paper
Weinberg, Steven; Moore, Damien
Congressional Budget Office
The federal government's student loan programs for higher education convey substantial financial benefits to borrowers because of their broad availability and favorable terms. Of the various provisions included in a federal student loan contract, the option to consolidate individual loans contributes greatly to a borrower's benefits and the cost of the program to the government and taxpayers. The changes scheduled to take effect in July 2006 fundamentally change the terms of the student loan program, fixing the interest rate on original and consolidated loans at 6.8 percent and 6.875 percent, respectively. This will greatly reduce the cost of these loans to the government. The analysis in this paper illustrates the financial costs to the government that would result from policy alternatives that have existed or been considered in the past. It also applies to options that might be considered by the Congress for use in other credit programs. The following are appended: (1) Assumptions Underlying the Cost Estimates in This Analysis; and (2) The Economics of the Consolidation Option. (Contains 1 table, 1 figure, and 26 footnotes.)
Congressional Budget Office. Ford House Office Building, 4th Floor, Second and D Streets SW, Washington, DC 20515-6925. Tel: 202-226-2809; e-mail:; Web site:
Publication Type: Information Analyses; Reports - Research
Education Level: Higher Education
Audience: N/A
Language: English
Sponsor: N/A
Authoring Institution: Congress of the U.S., Washington, DC. Congressional Budget Office.