Today the New America
Foundation's Education Policy Program released "Cost Estimates for Federal Student
Loans: The Market Cost Debate," by the program's Research Director
Jason Delisle. This paper exposes misleading and erroneous information
published by student loan industry trade associations and government agencies
regarding the cost of federal student loan programs. The report comes at a time
when disruptions in the credit markets and a presidential race could set the
stage for changes in student loan policy.
Many budget experts and stakeholder groups have argued that official cost
estimates for federal student loans reported by budget agencies are inaccurate
because they do not reflect "market costs" -- what a private entity
would charge taxpayers to fund and administer the same benefits and services
that the government provides. The Government Accountability Office (GAO),
private consulting organizations, and student loan trade associations have all
weighed in. Unfortunately, their conclusions are confusing and often incorrect.
"Cost Estimates for Federal Student Loans: The Market Cost Debate"
aims to help policymakers, the media and the public better understand this
complicated issue.
"Trade associations and consulting organizations working on behalf of the
student loan industry have twisted a legitimate budgeting concept into a
half-truth," Delisle said. "They have tried to use the market cost
concept to discredit government estimates that show subsidizing lenders to make
student loans is more expensive than the government making the loans directly.
But their reasoning and methodology include serious errors, and many of their
conclusions are wrong. Making matters worse, the GAO has made similar errors in
its own work on the topic."
The Market Cost paper includes:
- A discussion and explanation of the market cost concept
for federal student loan programs.
- A detailed analysis and critique of the market cost
reports published by government agencies, private consulting companies,
and trade associations representing student loan companies.
- An identification and explanation of the major errors
and misleading information in the work published on the market cost
concept for federal student loans.
- A discussion of student loan cost estimates by Northwestern University's Deborah Lucas and the
Congressional Budget Office's Damien Moore that corrects many of the
errors made in other market cost work.
The full report
is available at http://www.newamerica.net/publications/policy/cost_estimates_federal_student_loans.
To arrange an interview with Jason Delisle, please contact Erin Drankoski at
202-997-8727 or e-mail drankoski@newamerica.net.
Additional Information:
Jason Delisle's bio: LINK
New America's Education Policy Program homepage: LINK
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The
New America Foundation is a nonprofit, nonpartisan public policy institute that
invests in new thinkers and new ideas to address the next generation of
challenges facing the United
States. Headquartered in Washington D.C., New
America also has offices in California.
