Adjustable Price to have Mortgage Consolidation ‘Viable,’ GAO States

The training Department’s proposal first off charging an adjustable rate of interest as opposed to a fixed, low rate to individuals who merge multiple federal figuratively speaking towards the one is an effective “feasible selection for cutting government will set you back” inside education loan applications, the You.S. Bodies Responsibility Place of work said inside the a march letter so you can Republican lawmakers, that has expected the latest remark.

The training Department’s suggestion first off billing an adjustable interest rate as opposed to a fixed, low rate in order to individuals exactly who mix numerous federal student education loans towards a person is a good “practical option for reducing government will set you back” during the education loan software, new You.S. Government Accountability Office told you within the a march letter so you’re able to Republican lawmakers, who had questioned the fresh new remark.

Within the funds proposal toward 2006 financial seasons, the fresh new Bush government recommended an offer — to start with submit by the Domestic Republicans when you look at the legislation to extend the fresh new Advanced schooling Work — who pay money for a rise in the fresh new Pell Give Program mainly by way of some changes in the way the a couple of government education loan applications are treated, for instance the change to help you a varying rate of interest on system to own combining finance. Advocates for college students intensely contradict eg a big change, hence when you find yourself protecting the federal government currency tend to ratchet up the costs so you can consumers.

The fresh new GAO awarded research in that analyzed different ways to reduce costs regarding the financing system, and suggested the loan combination changes as one possibility. Associate. John A. Boehner (R-Ohio), chairman of the home away from Representatives Panel to your Degree together with Workforce, requested the fresh new GAO so you’re able to reassess the trouble to see “if or not financial facts — such as most recent and you can projected interest levels — is actually in a fashion that a variable rate of interest stays a feasible alternative to have reducing government costs of student loan consolidation.” The solution is still sure, the new GAO letter states.

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Inside the a pr release on Domestic education panel, Boehner told you: “It’s the perfect time to own Congress to heed this new warnings of one’s GAO, and you will address the brand new ballooning will cost you of one’s integration financing system — an application that does not suffice children, but high income college students. We must heal the main focus of one’s Degree Work to help you the current and future low and you can middle-income people it actually was created to serve.”

Nevertheless Domestic press release appears to overstate the new GAO’s results a while, stating that the fresh new accountabilty work environment “will continue to strongly recommend changeable rates of interest.” Since the letter continues to advise that after the variable price try good “feasible alternative” getting reducing government can cost you, it looks to quit really in short supply of suggesting that government indeed capture one step.

A good spokesman for Rep. George Miller regarding Ca, the big Democrat on the House studies committee, told you the Congressman had not seen the GAO letter and may also not discuss they. However, the guy detailed a current Congressional Finances Office study finding that “continuing so that youngsters the choice to help you combine the loans during the a minimal fixed rate will definitely cost $255 mil along side next ten years,” never as versus guess Republicans enjoys considering.

The fresh new spokesman added: “Rep. Miller firmly believes that people must do everything possible and then make college economical for college students — no less affordable — therefore however maybe not assistance removal of the current reduced repaired price integration work with.”

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.