Student Loan and Higher Ed Communities Await President’s Budget
As always, the President’s budget will be a major focus for all involved in education during the first of the year. Although the President refrained from discussing higher education policy in his State of the Union address, the full details of the budget will be announced Monday.
Although the details of the budget are under a shroud of secrecy, the FFEL community will be anxiously anticipating the comparative cost numbers for the FFEL and Direct Loan programs. One issue being watched closely will be how the estimated costs of the FFELP and Direct Loan Programs change thanks to the drastic cuts to FFELP that were passed in last year’s student loan reconciliation bill. The President’s budget will show the first official calculation, via the Office of Management and Budget (OMB).
Most observers have said they will take a “wait and see” approach on the comparative costs of the two programs. However, should official numbers illustrate that Direct Lending is more expensive than FFEL, Direct Loan supporters could have a major problem with one of the main arguments in support of the government administered student lending program, especially considering that the FFEL community maintains that the ineffective forecasting models still skew budget scoring against private lenders.