December 19, 2007

Does Direct or FFELP cost less? New #’s from Treasury only tell part of the story

Posted in Legislation Affecting Students at 8:12 AM by Joe From Boston


The Treasury dept. recently released figures showing that the Direct loan program is cheaper than the FFELP program – but the numbers are highly contestable!  According to the Chronicle of Higher Education,

“any estimated gain to the Treasury in 2007 from the direct-loan program could just mean the department made slight downward revisions in annual program costs “going back many years,” with all the accumulated differences piling up in the 2007 figure, said Kevin Bruns, executive director of America’s Student Loan Providers, an industry lobby group.

And more important, Mr. Bruns noted, the Treasury report for the 2007 fiscal year, which ended September 30, does not include the effects of legislation passed by Congress in September cutting about $20-billion in subsidies to lenders in the FFEL program.”

You can read the whole article here.

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