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What Financial Aid Officers are saying about the FFELP
Read what Financial Aid Officers are saying about the Federal Family Education Loan Program - the student loan program used exclusively by 83 percent of schools.
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Fast Facts
The private sector student loan program costs and defaults are at the lowest rate in the history of the program.
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New Estimates Reflect Large Taxpayer Savings
Washington, D.C. Dec. 5, 2007—The Administration’s revised cost estimates, posted on the U.S. Department of Education’s Web site, show the dramatic impact that the College Cost Reduction and Access Act (CCRAA) has had on the relative costs of the Federal Family Education Loan Program (FFELP) and the Federal Direct Loan Program (FDLP), Inside Higher Education reported today. The recently enacted CCRAA cut FFELP by more than 80 percent.
“The estimates shed a whole new light on federal student-loan program costs,” Kevin Bruns, executive director of America’s Student Loan Provider said. “For every $100 in new guaranteed loans made in FY 2008, the government will spend $1.72; for every $100 in direct loans, the government will spend $4.26.
“These results are stunning, but not a surprise, given the size of CCRAA’s cuts – not to mention FFELP’s superior efficiency,” Bruns said. “Direct loans are nearly two and a half times more costly to the government than guaranteed loans.”
The department’s tables reflect the official Administration cost estimates for FY 2008, incorporating changes from the Mid-Session Review of the President's 2008 Budget and passage of the CCRAA. The Administration now projects loan volume and subsidy costs for FY 2008 as follows:
| |
Est. Loan Volume |
Est. Subsidy Cost |
Est. Subsidy Rate
(Per $100/New Loans)* |
| FDLP |
$17.94 billion |
$764.7 million |
$4.26 |
| FFELP |
$89.28 billion |
$1,53 billion |
$1.72 |
*ASLP computation; volume and cost data are rounded.
Many critics have long cited the government’s cost estimates to claim that FFELP costs the government more to operate, even though they undercount FDLP’s costs, independent experts agree. More recently, several presidential campaigns have proposed eliminating FFELP to save money.
“Schools nationwide and the student loan community have long believed that FFELP is superior in terms of borrower costs, service, and innovation,” Bruns said. “Officially now, FFELP’s also cheaper.
“Since 80 percent of federal student loans are lower-cost FFELP loans, these estimates mean huge savings for taxpayers.”
The new budget tables and the Inside Higher Ed article are available at the sites that follow:
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America’s Student Loan Providers represents 87 of the nation’s leading private, nonprofit and state-based education and financial organizations that provide guaranteed student loans through the Federal Family Education Loan Program. By leveraging private financial markets and competing for the right to lend to students, ASLP members offer low-cost loans to millions of students and superior levels of service to most of the approximately 5,000 postsecondary institutions that participate in FFELP. More information is available at www.aslp.us or call 202.721.1190.
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