Comments on CRS Direct Loan Report

Pursuant to a congressional request, GAO reviewed the Congressional Research Service's (CRS) contentions that: (1) converting the Federal Family Education Loan Program into a direct lending program would not increase national income or achieve great savings; (2) federal administrative costs could absorb whatever interest savings direct lending generated; and (3) guaranteed and direct lending programs provide the same loan volume and lead to equal increases in educational investment. GAO noted that: (1) its relative cost analysis focused on federal budgetary costs, in that direct loans would allow the same loan volume at a lower federal cost; (2) the federal government could use savings accruing from direct lending for other spending or deficit reduction; and (3) direct lending would generate additional administrative expenses for new computer systems and training compared to guaranteed lending.