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Diane Publishing Books
Federal Student Loans: Borrower Interest Rates Cannot Be Set in Advance to Precisely and Consistently Balance Federal Revenues and Costs
Melissa Emrey-Arras (au)
Federal student loans issued under the Direct Loan program play a key role in ensuring access to higher education for millions of students. The costs of the program to the government include administrative costs like loan servicing. They also include subsidy costs, which are the estimated long-term costs to the government of providing loans, such as the governmentäó»s cost of borrowing and defaults on loans. Some have questioned whether borrower interest rates can be more precisely set to cover these costs without generating excess federal income. This report addresses (1) how the costs of administering the Direct Loan program have varied in recent years; (2) how estimated subsidy costs have varied in recent years; and (3) how changes in different variables influence the overall cost of the program and the borrower interest rate needed to cover those costs. Tables and figures. This is a print on demand report.
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