22 Apr Changeable Speed to possess Mortgage Combination ‘Viable,’ GAO Says
The education Department’s proposition first off asking a changeable interest rate in lieu of a predetermined, low rate so you’re able to borrowers which mix numerous government student loans on the one is a “viable choice for reducing government can cost you” inside student loan programs, brand new U.S. Bodies Liability Workplace said into the a february page in order to Republican lawmakers, who’d asked the brand new feedback.
The training Department’s proposition first off charging a varying rate of interest unlike a predetermined, low rate in order to borrowers who combine several federal student education loans with the a person is a beneficial “practical selection for cutting government will cost you” when you look at the student loan apps, new U.S. Regulators Responsibility Workplace told you inside a february letter in order to Republican lawmakers, that has expected the brand new comment.
Within its budget proposal into 2006 fiscal seasons, the brand new Plant administration endorsed an offer — in the first place put forward by the Family Republicans in laws and regulations to extend the newest Higher education Operate — who would buy an increase in the brand new Pell Give System mostly courtesy a few changes in how the one or two government student loan applications is actually handled, for instance the shift so you’re able to an adjustable interest regarding program having merging finance. Supporters for college students intensely contradict particularly a big change, which if you find yourself preserving the government currency have a tendency to ratchet within the costs so you’re able to consumers.
The GAO approved research in this analyzed different a method to keep your charges down from the financing system, and recommended the loan combination alter all together opportunity. Representative. John A good. Boehner (R-Ohio), president of the property off Representatives Committee on the Education plus the Associates, questioned the fresh new GAO to reevaluate the issue observe “if or not economic issues — eg latest and you will estimated interest rates — try in a fashion that a changeable interest rate stays a https://onlineloanslouisiana.net/cities/natchitoches/ practical option having reducing federal will set you back away from education loan consolidation.” The solution is still sure, this new GAO page claims.
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In the a news release about Family studies panel, Boehner said: “It’s time to own Congress to help you heed new warnings of one’s GAO, and you can target brand new ballooning will set you back of integration financing system — a program that will not serve people, but highest income college or university students. We should instead repair the focus of the Advanced schooling Operate so you’re able to the present day and you can upcoming reduced and you may middle-money college students it was created to suffice.”
However the House news release seems to overstate the latest GAO’s conclusions sometime, proclaiming that brand new accountabilty place of work “will continue to highly recommend varying interest rates.” As the letter continues to advise that adopting the adjustable price was a good “feasible choice” for cutting government costs, it appears to be to end better in short supply of recommending that bodies indeed need one to step.
Good spokesman to possess Associate. George Miller away from California, the big Democrat with the House knowledge committee, said the fresh new Congressman hadn’t seen the GAO page and could maybe not discuss it. However, the guy listed a recent Congressional Funds Work environment studies finding that “continued to let college students the possibility so you can consolidate the fund in the a low fixed rates will surely cost $255 billion across the second 10 years,” less than the estimate Republicans possess considering.
The fresh spokesman added: “Rep. Miller strongly believes that individuals want to do what you you are able to and then make college or university less costly for students — not less reasonable — thus however not help elimination of the present day lower repaired rate combination 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.