How CBO Analyzes the Sources of Lenders’ Interest Income ...

Congressional Budget Office

Background Paper

How CBO Analyzes the Sources

of Lenders¡¯ Interest Income on

Guaranteed Student Loans

June 2004

THE CONGRESS OF THE UNITED STATES

A

CBO

R E P O R T

How CBO Analyzes the Sources of

Lenders¡¯ Interest Income on

Guaranteed Student Loans

June 2004

The Congress of the United States O Congressional Budget Office

Preface

This report describes the method the Congressional Budget Office (CBO) uses to estimate the

sources of lenders¡¯ interest income on student and parent loans in the Federal Family Education

Loan program. That method accounts for the likely values of future interest rates and specific

program rules, including those for setting borrowers¡¯ rates and for calculating the government¡¯s

supplemental payments.

Nabeel Alsalam (202-225-2639) of CBO¡¯s Health and Human Resources Division prepared this

report. It benefited from comments provided by Robert Arnold, Paul Cullinan, Robert Dennis,

Deborah Kalcevic, Samuel Kina, Steve Lieberman, Ralph Smith, Bruce Vavrichek, and Dennis

Zimmerman, all of CBO.

Christine Bogusz edited the report. Maureen Costantino prepared it for publication, and Annette

Kalicki produced the electronic versions for CBO¡¯s Web site.

Douglas Holtz-Eakin

Director

June 2004

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