Variable Price to have Loan Combination ‘Viable,’ GAO Says

Variable Price to have Loan Combination ‘Viable,’ GAO Says

The training Department’s suggestion first off asking a variable interest rate in lieu of a predetermined, low rate to borrowers whom mix numerous federal college loans toward one is a “feasible selection for reducing government costs” when you look at the student loan programs, the fresh You.S. Regulators Responsibility Work environment told you during the a march page so you’re able to Republican lawmakers, who’d requested brand new opinion.

The education Department’s proposal to begin with asking an adjustable interest rate in the place of a predetermined, low rate so you’re able to individuals which blend multiple government college loans into one is an effective “practical choice for reducing government will set you back” inside the education loan applications, the newest U.S. Bodies Accountability Work environment said from inside the a march page so you can Republican lawmakers, that has asked the review.

In its funds suggestion into 2006 fiscal seasons, the brand new Plant administration endorsed a proposition — to begin with submit by the House Republicans during the regulations to extend brand new Higher education Work — that would purchase a boost in brand new Pell Offer Program mostly due to several changes in how the a couple federal student loan apps was treated, for instance the move so you can a changeable rate of interest on program for merging funds. Supporters for students intensely contradict such as a distinction, and that when you are preserving the us government money usually ratchet in the costs in order to borrowers.

The new GAO granted a report in this reviewed various a means to keep costs down in the loan program, and you can ideal the borrowed funds consolidation transform as a whole options. Representative. John A beneficial. Boehner (R-Ohio), president of the property out of Agents Committee to your Studies and also the Employees, questioned the latest GAO in order to reevaluate the problem observe “if economic issues — such most recent and you may projected interest rates — is such that an adjustable interest rate remains a practical option for reducing government costs out-of student loan consolidation.” The solution is still yes, new GAO letter says.

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Inside a pr release on Household knowledge committee, Boehner told you: “It’s the perfect time for Congress to follow new warnings of the GAO, and you will target the brand new ballooning costs of one’s consolidation financing program — a program that does not serve people, however, large money school graduates. We need to fix the focus of the Advanced schooling Operate in order to the modern and upcoming reasonable and you may middle-money pupils it actually was intended to suffice.”

However the Home news release generally seems to overstate the latest GAO’s results a bit, stating that the latest accountabilty place of work “will continue to highly recommend changeable interest levels.” As page will continue to suggest that pursuing the variable speed is actually a “feasible alternative” to have cutting federal costs, it appears to be to prevent better short of recommending that authorities indeed bring that action.

An effective spokesman to have Rep. George Miller out of California, the major Democrat toward Family studies panel, said the new Congressman hadn’t heard of GAO letter and may also not discuss it. But the guy indexed a recently available Congressional Finances Office study discovering that “continuous to let people the option so you’re able to combine the fund within a low repaired rates will surely cost $255 million over the second a decade,” far less than the guess Republicans have provided.

The fresh spokesman extra: “Agent. Miller highly thinks that people need to do that which you possible and come up with school economical for college students — no less reasonable — very he would perhaps not assistance elimination of the present day low fixed speed integration work for.”

Doug Lederman

Doug Lederman is editor and co-founder of Inside Higher Ed. He helps lead the news organization’s editorial operations, overseeing news content, opinion pieces, career advice, blogs and other features. Doug speaks widely about higher education, including on C-Span and National Public Radio and at meetings and on campuses around the country, and his work has appeared in The New York Times and USA Today, among other publications. Doug was managing editor of The Chronicle of Higher Education from 1999 to 2003. Before that, Doug had worked at The Chronicle since 1986 in a variety of roles, first as an athletics reporter and editor. He has won three National Awards for Education Reporting from the Education Writers Association, including one in 2009 for a series of Inside Higher Ed articles he co-wrote on college rankings. He began his career as a news clerk at The New York Times. He grew up in Shaker Heights, Ohio, and graduated in 1984 from Princeton University. Doug lives with his wife, Kate Scharff, in Bethesda, Md.