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Consolidated Student Loans: Borrowers Benefit but Costs to Them and the Government Grow

HRD-90-8 Published: Jun 15, 1990. Publicly Released: Jun 15, 1990.
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Highlights

Pursuant to a congressional request, GAO reviewed the impact of the student loan consolidation program under the Higher Education Amendments of 1986.

Recommendations

Matter for Congressional Consideration

Matter Status Comments
If Congress wishes to retain and reauthorize the program and maintain the benefits to students with loan consolidations, while reducing program costs, it may wish to consider: (1) charging consolidated loan borrowers a loan origination fee; (2) increasing the minimum interest rate on consolidated loans; or (3) reducing the lenders' special allowance payment rate.
Closed – Implemented
Congress adopted part (3) of the recommendation in the Higher Education Amendments of 1992, Public Law 102-325. The other two parts were not adopted and it is unlikely Congress will adopt them in the forseeable future.

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Topics

Aid for educationCollege studentsGovernment collectionsGovernment guaranteed loansLending institutionsLoan defaultsLoan repaymentsStudent financial aidStudent loansStudent loan repayment program