Enzi Asks For Honest Accounting of Higher Ed Proposal
CBO Will Calculate How Much Bill Will Put Taxpayers Deeper “In the Red”
WASHINGTON D.C. – Senate Budget Committee Chairman Mike Enzi (R-WY) today issued a letter asking the Congressional Budget Office (CBO) Director to score S. 2677, the In the Red Act of 2016, which includes several costly higher education spending initiatives. Lacking accountability measures, it is unclear whether the bill would actually increase college access for students and families, or if it would trigger tuition increases that could affect the spiraling college costs for the 40 million Americans who owe more than $1.3 trillion in student loan debt. CBO is directed to calculate how much the spending provisions in the bill would significantly deepen projected federal budget deficits.
Chairman Enzi requested that the student loan portion of the bill be scored by CBO under both its current scoring methodology (Fair Credit Reform Act, or FCRA procedures) and a fair value approach. CBO stated recently that fair value represents a more comprehensive approach to measuring the cost of federal credit programs than does FCRA, since it recognizes market risk as a cost to the government. Scoring loan programs under both methodologies is called for under the FY 2016 Congressional Budget Resolution.
Read the full letter to CBO here.
Excerpts follow:
“CBO data indicates that, under fair value scoring, every type of student loan except Parent PLUS has a cost to the government, and the collective cost of all student loans originated during the next decade is projected to be $190 billion.”
“The loan refinancing provision in S. 2677 would facilitate the refinancing of private student loans onto the balance sheet of the U.S. Treasury. When CBO scored S. 2432 last Congress, under FCRA scoring, this refinancing of private student loans – at borrower rates lower than those charged by the original lender – generated claimed savings to the government of several billion dollars. This provision has never been scored on a fair value basis, however.”
In a related effort to fully understand the cost of federal student loans, Chairman Enzi requested last year that the Government Accountability Office (GAO) assess the Department of Education’s track record of estimating the cost of income-driven repayment plans (IDR), and the efficacy of its current cost estimation model. IDR enrollment has accelerated over the past few years, with twenty percent of federal student loan borrowers now in such plans.
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