Senate bill would require changes in calculating student loan costs
A new Senate bill would require federal student loan programs to use so-called fair-value accounting â which would show a much larger cost to the government of the program. In introducing her Budget and Accounting Transparency Act today, Sen. Deb Fischer (R-Neb.) cited a POLITICO report of a $21.8 billion shortfall in the student loan program. She said her bill would protect taxpayers and âprevent wasteful mistakes like these from happening.â Critics believe the current government accounting system for credit programs dramatically understates costs because the budgets donât account for certain risks private lenders have to take into account. Story Continued Below The bill would also require federal agencies to make budgetary justification materials public, and require the Congressional Budget Office and the Office of Budget and Management to study whether to use fair-value accounting in federal insurance programs. The House voted for fair-value budget accounting in the last Congress, arguing it makes the costs of federal programs more transparent. But advocacy groups such as Young Invincibles have opposed it. They say the method makes student loans appear more expensive than they are in government cost estimates, potentially opening the door to cuts.