Adjustable Rate to possess Mortgage Consolidation ‘Viable,’ GAO States

The training Department’s offer to begin with billing an adjustable rate of interest as opposed to a fixed, low-rate so you can consumers exactly who combine numerous government student education loans towards the one is an excellent “viable option for cutting government costs” during the student loan applications, the new U.S. Regulators Liability Workplace said during the a february page so you’re able to Republican lawmakers, that has asked the feedback.

The education Department’s suggestion to begin with charging you a varying interest rather than a predetermined, low rate so you can consumers who combine multiple government college loans on one is an effective “practical option for reducing government can cost you” during the student loan applications, the latest You.S. Regulators Responsibility Work environment said during the a february page to Republican lawmakers, who had expected the newest comment.

With its budget proposition on the 2006 fiscal seasons, the brand new Plant management endorsed a proposition — originally put forward of the Home Republicans for the laws and regulations to extend the newest Degree Operate — who would pay money for a rise in this new Pell Give System largely by way of a few alterations in the way the a couple of government student loan software try treated, like the change so you can a varying rate of interest regarding the system to possess combining money. Supporters for students vigorously contradict particularly a big difference, which if you find yourself rescuing the us government money have a tendency payday loans Troy MO to ratchet in the will cost you so you’re able to individuals.

The latest GAO granted a research because assessed different an approach to keep your charges down on financing program, and advised the borrowed funds integration change as a whole possibility. Representative. John A beneficial. Boehner (R-Ohio), chairman of the house regarding Agents Committee to your Studies additionally the Workforce, requested brand new GAO so you can reevaluate the challenge observe “whether or not monetary activities — such as for instance current and you can projected interest levels — are such that a changeable interest remains a viable alternative to possess reducing government will set you back from student loan consolidation.” The clear answer continues to be yes, brand new GAO letter states.

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During the a press release regarding the Home knowledge panel, Boehner told you: “It’s the perfect time having Congress so you’re able to stick to new cautions of your GAO, and address the newest ballooning can cost you of your consolidation loan program — an application that does not serve children, but highest income university students. We should instead restore the main focus of the Advanced schooling Work so you’re able to the current and future reasonable and middle-money pupils it had been designed to suffice.”

But the House news release seems to overstate this new GAO’s conclusions sometime, saying that the newest accountabilty work environment “continues to suggest changeable interest levels.” Just like the letter continues to recommend that following the varying price was an excellent “practical option” getting cutting government will set you back, it appears to be to prevent better short of indicating that the authorities in fact need that step.

Good spokesman for Agent. George Miller out-of Ca, the top Democrat to the Household studies panel, told you the fresh Congressman hadn’t seen the GAO page and may also not comment on they. But he listed a recent Congressional Budget Place of work study finding that “persisted so that children the option so you’re able to consolidate the loans in the the lowest repaired speed costs $255 mil along the next ten years,” a lot less as compared to guess Republicans provides given.

The new spokesman extra: “Rep. Miller highly thinks we should do what you it is possible to to make school cheaper for students — believe it or not reasonable — thus he would not help removal of the present day reduced fixed rate consolidation benefit.”

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.

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