Guaranteed Student Loans: Eliminating Interest Rate Floors Could Generate Substantial Savings
HRD-92-113
Published: Jul 21, 1992. Publicly Released: Jul 21, 1992.
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Highlights
Pursuant to a congressional request, GAO provided information on how interest rate floors on certain guaranteed student loans affect the federal government's and students' costs when rates on short-term government securities decline.
Recommendations
Matter for Congressional Consideration
| Matter | Status | Comments |
|---|---|---|
| Congress should revise the Higher Education Act, as amended, to make the interest rate on future Stafford and consolidation student loans vary with the yield on Treasury bills, not to exceed current maximum rates. | Section 427A(e) of the Higher Education Act of 1965 was amended effective October 1, 1992, to require adjustments to borrowers' loan repayments for any excess interest paid. |
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Cost controlDirect loansGovernment guaranteed loansLoan interest ratesStudent financial aidStudent loansUS Treasury securitiesInterest ratesStudentsGuaranteed student loans