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

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

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

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Just Just What GAO Found

Complete 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 dropped. The rise as a whole administrative expenses mainly outcomes from a growth of over 300 per cent into the quantity of Direct Loans throughout that time period that is same. One primary factor contributing to this loan amount enhance had been a legislation that finished student loan originations under a federally guaranteed loan program leading to brand brand new originations being made underneath the Direct Loan system. Loan servicing–which includes pursuits like counseling borrowers on choosing repayment plans, processing payments, and collecting on loans in delinquent status–is the biggest category of administrative expenses, comprising 63 % of total Direct Loan administrative expenses in financial 12 months 2012. While total administrative expenses have actually increased, expenses per debtor as well as other device expenses have actually remained constant or declined. For instance, the servicing price per debtor has remained approximately $25 within the six-year duration we examined. Nevertheless, lots of facets, including a brand new repayment framework for loan servicing agreements to reward servicers for maintaining more borrowers in payment status, have created some doubt in regards to the servicing expense per debtor in coming years.

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