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Federal Student Loans: orrower Interest Rates Cannot Be Set ahead of time to exactly and regularly Balance Federal Revenues and expenses

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

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Exactly Just What GAO Found

Complete Direct Loan costs that are administrative from $314 million to $864 million from fiscal years 2007 to 2012, but federal expenses per debtor have generally speaking remained constant or dropped. The rise as a whole administrative costs mainly outcomes from a rise of over 300 % into the quantity of Direct Loans throughout that time period that is same. One main factor contributing 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 payments, and gathering on loans in delinquent status–is the biggest category of administrative expenses, comprising 63 per cent of total Direct Loan administrative expenses in financial 12 months 2012. While total administrative expenses have actually increased, expenses per debtor along with other unit expenses have actually remained constant or declined. As an example, the servicing expense per debtor has remained approximately $25 on the six-year duration we examined. But, lots of facets, including a payment that is new 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.

Individual from administrative expenses, calculated subsidy expenses differ by loan cohort–a number of loans manufactured in a solitary year–and that is fiscal with time.