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ERIC Number: ED184445
Record Type: Non-Journal
Publication Date: 1979-Jun-21
The National Educational Loan Bank: A Proposal for Improving the System of Lending for Higher Education. Working Paper, Preliminary Draft.
Deitch, Kenneth M.
A National Education Loan Bank (NELB) is proposed as an alternative to existing federal loan programs for education, such as the National Direct Student Loan program and the Guaranteed Student Loan program. The history and structures of these two programs are detailed: financing, costs, insurance arrangements, agencies, volume, and interest rates. The proposed NELB has these features: (1) it is intended to greatly reduce the federal subsidy that keeps the other programs' interest rates low; (2) it would operate entirely on capital the government raises through borrowing; (3) it would transfer the task and paper work of loan origination from the bank to the financial aid officer, a substantial savings to the program; (4) it encourages and enables loans to parents as well as to students; and (5) it calls for collection to be managed by the Internal Revenue Service to minimize default. It is felt that with this program the cost per dollar loaned may drop 37.5 percent, some complexities would be eliminated, and the volume of loans would increase by $62.5 billion. Issues raised by this approach to educational loans--such as the principle of govenment subsidy and the reduced program flexibility--are discussed. (MSE)
Publication Type: Opinion Papers
Education Level: N/A
Sponsor: Sloan Commission on Government and Higher Education, Cambridge, MA.
Authoring Institution: N/A
Identifiers - Laws, Policies, & Programs: Guaranteed Student Loan Program