Federal Student Loans: Borrower Interest Rates Cannot Be Set in Advance to Precisely and Consistently Balance Federal Revenues and Costs

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A letter report issued by the Government Accountability Office with an abstract that begins "Total Direct Loan administrative costs grew from $314 million to $864 million from fiscal years 2007 to 2012, but federal costs per borrower have generally remained steady or fallen. The increase in total administrative costs largely results from an increase of over 300 percent in the number of Direct Loans during that same time period. One key factor contributing to this loan volume increase was a law that ended student loan originations under a federally guaranteed loan program resulting in new originations being made under the ... continued below

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United States. Government Accountability Office. January 31, 2014.

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Description

A letter report issued by the Government Accountability Office with an abstract that begins "Total Direct Loan administrative costs grew from $314 million to $864 million from fiscal years 2007 to 2012, but federal costs per borrower have generally remained steady or fallen. The increase in total administrative costs largely results from an increase of over 300 percent in the number of Direct Loans during that same time period. One key factor contributing to this loan volume increase was a law that ended student loan originations under a federally guaranteed loan program resulting in new originations being made under the Direct Loan program. Loan servicing--which includes activities like counseling borrowers on selecting repayment plans, processing payments, and collecting on loans in delinquent status--is the largest category of administrative costs, comprising 63 percent of total Direct Loan administrative costs in fiscal year 2012. While total administrative costs have increased, costs per borrower and other unit costs have remained steady or declined. For example, the servicing cost per borrower has remained roughly $25 over the six-year period we examined. However, a number of factors, including a new payment structure for loan servicing contracts to reward servicers for keeping more borrowers in repayment status, have created some uncertainty about the servicing cost per borrower in coming years."

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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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  • January 31, 2014

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  • June 12, 2014, 7:50 p.m.

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United States. Government Accountability Office. Federal Student Loans: Borrower Interest Rates Cannot Be Set in Advance to Precisely and Consistently Balance Federal Revenues and Costs, report, January 31, 2014; Washington D.C.. (digital.library.unt.edu/ark:/67531/metadc299197/: accessed October 20, 2017), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.