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Letter to the Honorable George Miller 1 (September 2009)

handle is hein.congrec/cbo8753 and id is 1 raw text is: CONGRESSIONAL BUDGET OFFICE Douglas W. Elmendorf, Director U.S. Congress Washington, DC 20515 September 11, 2009 Honorable George Miller Chairman Committee on Education and Labor U.S. House of Representatives Washington, DC 20515 Dear Mr. Chairman: As you requested, the Congressional Budget Office has reviewed the Student Loan Community Proposal (the Community Proposal), draft legislation put forth on behalf of several organizations in the lending community that would modify the federal student loan programs. While the Community Proposal includes several provisions that would affect federal spending, the following analysis focuses only on those related to eliminating the existing guaranteed loan program. As in H.R. 3221, the Student Aid and Fiscal Responsibility Act of 2009, as reported by the House Committee on Education and Labor, the Community Proposal would reduce federal outlays by eliminating new lending from the guaranteed student loan program (known as the Federal Family Education Loan [FFEL] program). Unlike H.R. 3221, however, the Community Proposal would permit new loans to be originated by federally designated private lenders and then transferred to the federal government. In addition to providing an estimate for the proposal as drafted, CBO was asked to estimate the costs of the Community Proposal assuming that two loan-related provisions authorizing spending subject to appropriation (that is, discretionary spending) in the draft Community Proposal would be changed into direct (or mandatory) spending provisions. As a result, this letter presents CBO analyses of two alternatives: for the legislation as transmitted to CBO, and for a potential change of two loan provisions from authorizing discretionary appropriations to providing mandatory funding. CBO's Estimate of H.R. 3221 In its cost estimate for H.R. 3221, transmitted on July 24, 2009, CBO estimated that replacing new loans in the existing guaranteed loan program with new direct loans originated by the Department of Education would

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