Is the Government Just taxing Middle-class College Students?

[noimagination]

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The Congressional Budget Office calculatres that the Government is charging substantially more for the loans than market rate interest plus an administrative fee. This is a revenue generator (that is D.C.-speak for a tax). I understand that Washington wants to raise more revenue, but I thought I heard that they weren’t going to specifically tax the Middle-class. These premiums are charged to the Middle-Class - since they are the one taking out the lion’s share of these loans.

[CBO</a> | Fair-Value Accounting for Federal Credit Programs<a href=“emphasis%20mine”>/url</a>

The Federal Credit Reform Act of 1990 (FCRA) requires the costs of credit assistance to be measured by discounting—using rates on U.S. Treasury securities—expected future cash flows associated with a loan or loan guarantee to a present value at the time of disbursement.</p>

<p>In CBO’s view, FCRA-based cost estimates do not provide a full accounting of what federal credit programs actually cost the government because they do not incorporate the full cost of the risk associated with the loans.

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<p>Federal direct student loans are not free of risk. This report is a bit dated (still refers to both direct and private guaranteed loans) but take a look at the spread between FCRA and fair value accounting in Table 3 - and note that fair value subsidy rates are positive:
<a href=“http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/110xx/doc11043/03-25-studentloans.pdf[/url]”>http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/110xx/doc11043/03-25-studentloans.pdf](<a href=“http://www.cbo.gov/publication/43027]CBO”>http://www.cbo.gov/publication/43027)</a></p>