Why was there apparently a $15 billion difference between the Sallie Mae proposal and the President’s proposal?
CBO’s analysis of the Sallie Mae proposal has not been released. However, it is assumed that CBO did not estimate any taxpayer savings associated with the risk‐sharing (and resulting lower default rates) included in servicing of all student loans. Secondly, the Sallie Mae proposal provided for the payment of origination fees out of mandatory funding, whereas the Community Proposal accounts for origination costs the same way H.R. 3221 and the President’s proposal do. The CBO estimates that there will be 185 million new student loans over the next decade, of which 70 percent are assumed to be originated from the FFELP.1 Given the recent conversion of schools to Federal Direct Loan Program, it is expected that the actual percent for FFELP could be materially lower. For these fees to cost $15 billion, CBO must assume that the new program would originate 90 percent of all new student loans or that the market‐mechanism to set fees after 2012 would raise the fees substantially, rather than re
