Direct Student Loan Savings

Gao ID: HRD-93-25R July 15, 1993

Pursuant to a congressional request, GAO analyzed the estimated savings from implementation of a government financed direct student loan program during fiscal years 1994 through 1998, focusing on the impact of: (1) inflation; (2) interest rates; and (3) loan volume rates. GAO noted that: (1) the estimated savings from implementation of a direct loan program could total between $2.1 billion to $10.4 billion depending upon the financial scenario used; (2) the savings estimates were expressed in present value terms, and referenced the impact of the 1992 amendements and present value calculations for program costs; and (3) the scope of the analysis excluded loan repayments, proposed borrower interest rate reductions, income contingent repayments, and national service loan forgiveness.

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