BILL PURPOSE:
(1) Extends current student loan program borrower interest rate formulas
through June 30, 2006, and establishes fixed borrower interest rates
on loans made thereafter; and (2) permanently extends the availability
to lenders of special allowance payments on these loans based on separate
lender interest rate formulas.
OMB ESTIMATE:
P.L. 107-139 extends to June 30, 2006, the interest rate formula for
borrowers now in effect in both the FFEL and Direct Loans programs that
otherwise would change to new interest rate formulas on July 1, 2003.
It also permanently extends the existing formulas that govern the interest
rates that lenders earn in the FFEL program, thus enabling lenders to
continue receiving interest subsidies. On net, the changes to borrowers'
interest rates would reduce the cost to the government of consolidation
loans in 2002. In subsequent years, costs to the government are estimated
to increase, due both to lower interest rates paid by students and higher
net subsidies paid to lenders.
(Fiscal
years; in millions of dollars)
2002
2003
2004
2005
2006
2007
Net
costs....................................
-180
345
875
1,005
995
1,000
CBO ESTIMATE:
(Fiscal
years; in millions of dollars)
2002
2003
2004
2005
2006
2007
Net
costs....................................
-180
345
875
1,005
995
1,000
EXPLANATION
OF DIFFERENCES BETWEEN OMB AND CBO ESTIMATES:
The estimates
are the same.
CUMULATIVE
EFFECT OF DIRECT SPENDING AND REVENUE LEGISLATION ENACTED TO DATE:
(Fiscal
years; in millions of dollars)
2002
2003
2004
2005
2006
2007
Outlay
effect..............
-180
24,173
24,413
23,832
9,219
1,000
Receipt
effect............
0
-86,866
-106,319
-107,744
-126,474
0
Net
costs....................
-180
111,039
130,732
131,576
135,693
1,000
NOTE: The
cumulative effect of direct spending and revenue legislation enacted
to date is currently estimated to result in an end-of-session sequester.
The Administration looks forward to working with the Congress to ensure
that an unintended sequester does not occur.