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The analysis evaluates the expected budgetary effects of policy options that change the terms for new subsidized loans and adjust interest-rate-setting approaches across new direct loans.",{"@graph":14,"@context":73},[15,34,56],{"@type":16,"itemListElement":17},"BreadcrumbList",[18,23,27,31],{"item":19,"name":20,"@type":21,"position":22},"https://docshare.wps.com","Home","ListItem",1,{"item":24,"name":25,"@type":21,"position":26},"https://docshare.wps.com/document/","Document",2,{"item":28,"name":29,"@type":21,"position":30},"https://docshare.wps.com/document/research-report/","Research & Report",3,{"item":32,"name":10,"@type":21,"position":33},"https://docshare.wps.com/document/options-to-change-interest-rates-and-other-terms-on-student-loans-june-2013/583451/",4,{"url":32,"name":10,"@type":35,"image":36,"author":41,"headline":10,"publisher":44,"fileFormat":47,"inLanguage":8,"description":12,"dateModified":48,"datePublished":49,"encodingFormat":47,"isAccessibleForFree":50,"interactionStatistic":51},"DigitalDocument",{"url":37,"@type":38,"width":39,"height":40},"https://docshare.wps.com/thumbnails/options-to-change-interest-rates-and-other-terms-on-student-loans-june-2013/583451.png","ImageObject",300,407,{"name":42,"@type":43},"Jake","Person",{"url":19,"name":45,"@type":46},"DocShare","Organization","application/pdf","2026-11-06","2026-10-15",true,{"@type":52,"interactionType":53,"userInteractionCount":55},"InteractionCounter",{"@type":54},"ViewAction",5,{"@type":57,"mainEntity":58},"FAQPage",[59,65,69],{"name":60,"@type":61,"acceptedAnswer":62},"What is the Federal Direct Student Loan Program intended to do?","Question",{"text":63,"@type":64},"It provides loans to students and parents to help pay for postsecondary education.","Answer",{"name":66,"@type":61,"acceptedAnswer":67},"How does the report calculate the federal budget cost of a student loan?",{"text":68,"@type":64},"Under the 1990 Federal Credit Reform Act, the cost is recorded at disbursement and reflects expected government payments over the life of the loan, discounted to present value using U.S. Treasury interest rates.",{"name":70,"@type":61,"acceptedAnswer":71},"Why do projected savings depend on interest-rate differences?",{"text":72,"@type":64},"Savings arise from the gap between interest rates paid by borrowers and the lower rates the federal government effectively pays on Treasury securities; 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Any tables, figures, and boxes appear at the end of this document;  \nclick the hyperlinked references in the text to view them.  \nSummary  \nThe Federal Direct Student Loan Program offers loans to students and their parents to help pay for postsecondary education. Under current law, about $1.4 trillion in new direct loans will be made to students between 2013 and 2023, the Congressional Budget Office (CBO) projects. Analysts and policymakers have raised concerns about various features of the program, including a jump in the interest rate on what are known as subsidized loans—which account for about one-quarter of all new student loans—that is scheduled to occur on July 1, 2013.  \nThis report provides information about the direct student loan program and its effects on the federal budget under current law. It also presents an analysis of the expected budgetary effects of options for changing the terms on new subsidized student loans and of options for changing the overall approach to setting interest rates on all new direct student loans.  \nWhat Are the Budgetary Effects of the Federal Direct Student Loan Program?  \nCBO projects that the total cost to the federal government of student loans disbursed between 2013 and 2023 will be negative; that is, the student loan program will produce savings that reduce the deficit. Under rules established by the Federal Credit Reform Act of 1990 (FCRA), the cost of a student loan is recorded in the federal budget during the year the loan is disbursed, taking into account the amount of the loan, expected payments to the government over the life of the loan, and other cash flows—all discounted to a present value using interest rates on U.S. Treasury securities. Under  \nNotes: Interest rates for the Federal Direct Student Loan Program are set for the academic year in which loans are approved. Academic years run from July 1 through June 30. The figures and tables in this report reflect calculations of budgetary cost and subsidy rates on the basis of federal fiscal years, which run from October 1 through September 30.  \nNumbers in the text and tables may not add up to totals because of rounding.  \nFCRA’s rules, CBO estimates, savings from the program will be $184 billion for loans made between 2013 and 2023. The estimated savings are $37 billion in 2013 but will diminish over time to fall below $10 billion per year from 2018 through 2023. (That $37 billion in savings for loans originated in 2013 excludes savings of $15 billion that CBO expects to be recorded in the budget this year as a result of the Administration’s reassessment of the cost of student loans made in previous years.)  \nBecause FCRA requires the discounting of future cash flows using rates on Treasury securities, the effect of the student loan program on the federal budget depends in parton the difference between two sets of interest rates: those paid by borrowers and those paid by the federal government on Treasury securities. Beginning in July 2013, the interest rates charged for all student loans will be 6. 8 percent or 7.9 percent, depending on the type of loan. The government currently borrows at much lower rates; CBO expects the average for 10-year Treasury notes, for example, to be 2.1 percent during 2013. The large gap between the rates paid by student loan borrowers and those paid by the federal government is the source of the savings attributable to the  \nprogram in 2013. The rates the government pays are expected to rise in coming years, however, thereby reducing the annual budgetary savings from the student loan program.  \nFCRA accounting does not consider some costs borne by the government. In particular, it omits the risk taxpayers face because federal receipts from interest and principal payments on","cbCaiqeAOnZPKnPK","https://ap.wps.com/l/cbCaiqeAOnZPKnPK","pdf",194831,23,"English","# Summary\n## What Are the Budgetary Effects of the Federal Direct Student Loan Program?\n## How Would Setting Different Interest Rates Affect the Student Loan Program?","[{\"question\":\"What is the Federal Direct Student Loan Program intended to do?\",\"answer\":\"It provides loans to students and parents to help pay for postsecondary education.\"},{\"question\":\"How does the report calculate the federal budget cost of a student loan?\",\"answer\":\"Under the 1990 Federal Credit Reform Act, the cost is recorded at disbursement and reflects expected government payments over the life of the loan, discounted to present value using U.S. Treasury interest rates.\"},{\"question\":\"Why do projected savings depend on interest-rate differences?\",\"answer\":\"Savings arise from the gap between interest rates paid by borrowers and the lower rates the federal government effectively pays on Treasury securities; as government borrowing rates rise, savings diminish.\"}]","Options to Change Interest Rates and Other Terms on Student Loans - June 2013 | PDF",1792047271,58]