ASLP Executive Director Kevin Bruns responded to the March 4, 2005 editorial written by the Washington Post which claimed that the private sector student loan program was "10 times more expensive" than the government run student loan program.
In his letter, Bruns stated, "This number and the formula used to arrive at it are greatly in dispute. A recent study by PricewaterhouseCoopers -- and analyses by the Government Accountability Office, the Congressional Budget Office, the Education Department's inspector general and others before that -- found that the budget scorekeeping rules seriously understate the costs of direct loans."
Bruns further stated that "In fact, the department's financial statements show that the annual projected savings of the direct-loan program have never materialized. Since 2001 their cost has been revised upward by $7.7 billion, while guaranteed loans' cost was reduced by $11.3 billion."
A full copy of the letter which appeared on Page A18 of the Washington Post on April 25, 2005 follows:
Cost of Loans Disputed
The March 24 editorial "Close the Spigot" said, and an April 9 letter from Rep. Thomas E. Petri (R-Wis.) and Sen. Edward M. Kennedy (D-Mass.) repeated, the claim that privately administered student loans cost 10 times more than the loans made by the government.
This number and the formula used to arrive at it are greatly in dispute. A recent study by PricewaterhouseCoopers -- and analyses by the Government Accountability Office, the Congressional Budget Office, the Education Department's inspector general and others before that -- found that the budget scorekeeping rules seriously understate the costs of direct loans.
In fact, the department's financial statements show that the annual projected savings of the direct-loan program have never materialized. Since 2001 their cost has been revised upward by $7.7 billion, while guaranteed loans' cost was reduced by $11.3 billion.
KEVIN BRUNS
Executive Director
America's Student Loan Providers
Washington