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Changeable Rates to possess Financing Integration ‘Viable,’ GAO Claims

Changeable Rates to possess Financing Integration ‘Viable,’ GAO Claims

The education Department’s proposal first off recharging a variable interest unlike a fixed, low rate to consumers which blend multiple government figuratively speaking with the one is an excellent “practical option for cutting federal can cost you” for the student loan software, the brand new You.S. Authorities Liability Work environment said when you look at the a february page to Republican lawmakers, that has questioned the brand new comment.

The training Department’s suggestion first off charging an adjustable interest rate in place of a predetermined, low-rate in order to borrowers just who mix numerous government college loans with the one is an effective “viable option for cutting government can cost you” into the education loan applications, new You.S. Authorities Accountability Place of work told you for the a february page so you can Republican lawmakers, that has requested the new comment.

In its finances proposition into 2006 fiscal year, the brand new Bush government recommended a proposition — to begin with put forward of the Home Republicans in guidelines to extend the brand new Higher education Operate — who would buy a boost in the latest Pell Grant System mostly as a result of a few changes in the way the one or two federal student loan apps try managed, like the move to a changeable rate of interest regarding the program getting consolidating funds. Supporters for students intensely contradict particularly a significant difference, and that if you’re protecting the federal government currency tend to ratchet within the will set you back so you can borrowers.

New GAO granted a research where reviewed a number of a way to reduce costs about mortgage program, and you will recommended the loan consolidation transform as a whole chance. Agent. John A good. Boehner (R-Ohio), president of the property out-of Representatives Panel on the Knowledge together with Workforce, asked brand new GAO to help you reassess the trouble observe “if financial issues — such most recent and you can projected interest rates — is in a way that an adjustable interest stays a practical choice to have cutting federal will set you back out of education loan consolidation.” The answer continues to be yes, the new GAO letter states.

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Inside a news release from the Home knowledge panel, Boehner told you: “It’s time getting Congress so you can adhere this new cautions of your own GAO, and you can address the new ballooning can cost you of your consolidation mortgage system — a course that will not serve pupils, but highest money college or university students. We should instead fix the main focus of your own Degree Work so you’re able to the current and coming low and you may center-income college students it had been designed to suffice.”

Although Domestic news release seems to overstate this new GAO’s conclusions some time, stating that this new accountabilty work environment “will continue to suggest variable rates of interest.” Because letter continues to recommend that following the adjustable rate was a great “feasible option” for cutting government costs, it appears to quit well lacking indicating your government in fact just take one action.

An excellent spokesman to possess Associate. George Miller out of Ca, the big Democrat towards the House education panel, told you the brand new Congressman hadn’t heard of GAO page and may maybe not comment on they. But he noted a recently available Congressional Finances Office research finding that “continued so that youngsters the choice so you can consolidate its money on a reduced repaired price will cost $255 million along side 2nd a decade,” far less compared to imagine Republicans keeps given.

New spokesman extra: “Associate. Miller highly thinks that people should do that which you possible and work out school economical for college students — no less reasonable — very however perhaps not support removal of the current low fixed price combination 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.