Federal Student Loans: orrower Interest Rates Cannot Be Set beforehand to correctly and Consistently Balance Federal Revenues and expenses

Federal Student Loans: orrower Interest Rates Cannot Be Set beforehand to correctly and Consistently Balance Federal Revenues and expenses

GAO-14-234: Posted: Jan 31, 2014. Publicly Released: Jan 31, 2014.

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Exactly Exactly What GAO Found

Total Direct Loan costs that are administrative from $314 million to $864 million from financial years 2007 to 2012, but federal expenses per debtor have generally speaking remained constant or fallen. The rise as a whole administrative expenses mostly outcomes from a rise of over 300 % when you look at the wide range of Direct Loans through that exact same time frame. One factor that is key to this loan amount enhance ended up being a legislation that finished education loan originations under a federally guaranteed loan program causing brand new originations being made underneath the Direct Loan system. Loan servicing–which includes pursuits like counseling borrowers on picking payment plans, processing re re payments, and gathering on loans in delinquent status–is the category that is largest of administrative expenses, comprising 63 % of total Direct Loan administrative expenses in financial 12 months 2012. While total administrative costs have actually increased, costs per debtor along with other device expenses have actually remained steady or declined. As an example, the servicing expense per borrower has remained approximately $25 within the six-year duration we examined. But, a number of facets, including a brand new payment framework for loan servicing agreements to reward servicers for maintaining more borrowers in payment status, have created some doubt concerning the servicing expense per debtor in coming years.

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