How are the administrative expenses of originating and servicing federal student loans paid for under the Student Loan Community Proposal?
Under the President’s proposal, H.R. 3221, and the Community Proposal, the administrative expenses to originate loans are paid through annual appropriations. The costs associated with allowing schools a choice of loan originator are not counted in mandatory spending, nor are the costs associated with the Department of Education becoming the sole loan originator for every school in the nation. Importantly, the Community Proposal will avoid imposing additional costs on schools across the country to convert to direct lending and to make up for the essential services provided by private, state, and not‐for‐profit service providers that will be lost to them under the President’s proposal. Therefore, the Community Proposal maintains fees for origination but aligns them with other administrative expenses, just like the Federal Direct Loan Program, and proposes that they be funded on the discretionary side along with all other expenses for originating and servicing student loans. The appropria
