Department of Education's Federal Direct Loan Program: Status of Recommendations to Improve Cost Estimates and Presentation of Updated Cash Flow Information

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Correspondence issued by the General Accounting Office with an abstract that begins "Under the Department of Education's Federal Direct Loan Program (FDLP), students or their parents borrow money directly from the federal government through the vocational, undergraduate, or graduate schools that students attend. FDLP offers four loan types, including consolidation loans, which allow borrowers to combine multiple loans, possibly from different federal student loan programs, into a single loan with one monthly payment and a fixed borrower interest rate. The other three FDLP loan types provide variable borrower interest rates. The reported outstanding gross balance of FDLP loans to borrowers ... continued below

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United States. General Accounting Office. March 29, 2004.

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Correspondence issued by the General Accounting Office with an abstract that begins "Under the Department of Education's Federal Direct Loan Program (FDLP), students or their parents borrow money directly from the federal government through the vocational, undergraduate, or graduate schools that students attend. FDLP offers four loan types, including consolidation loans, which allow borrowers to combine multiple loans, possibly from different federal student loan programs, into a single loan with one monthly payment and a fixed borrower interest rate. The other three FDLP loan types provide variable borrower interest rates. The reported outstanding gross balance of FDLP loans to borrowers was $84.5 billion as of September 30, 2003, and the related allowance for subsidy--or the cost Education expected to incur on the outstanding loans--was $657 million. The key driver of the FDLP cost to the government is the difference between the borrower interest rate and Education's financing cost or borrowing rate from Treasury. Because of concerns about Education's reliance on estimates to project FDLP costs and a lack of historical information on which to base those estimates, the House Committee on the Budget previously asked us to review key aspects of Education's cost estimates for FDLP. Our January 2001 report identified the need for Education to improve its cost estimation process to provide more meaningful information. Recently, at the request of the Committee's Chairman, we assessed Education's progress in addressing our January 2001 recommendations and we updated certain cash flow information related to FDLP. This letter summarizes the information provided during our briefing on February 18, 2004."

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Government Accountability Office Reports

The U.S. Government Accountability Office (GAO) is an independent, nonpartisan agency that works for the U.S. Congress investigating how the federal government spends taxpayers' money. Its goal is to increase accountability and improve the performance of the federal government. The Government Accountability Office Reports Collection consists of over 13,000 documents on a variety of topics ranging from fiscal issues to international affairs.

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  • March 29, 2004

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  • June 12, 2014, 7:50 p.m.

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United States. General Accounting Office. Department of Education's Federal Direct Loan Program: Status of Recommendations to Improve Cost Estimates and Presentation of Updated Cash Flow Information, text, March 29, 2004; Washington D.C.. (digital.library.unt.edu/ark:/67531/metadc295891/: accessed November 18, 2018), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.