December 10, 1999

Direct-Loan Program Costs Less Than Its Rival, Education Department Claims

By PATRICK HEALY and WILL WEISSERT

In a blunt assessment of how much student loans cost the federal government, the U.S. Education Department told members of Congress last week that the direct-loan program will be far cheaper to support in 1999-2000 than the traditional system of federally guaranteed loans.

Department officials released an analysis -- which private lenders disputed -- showing that the six-year-old direct-loan program will actually save the U.S. Treasury money this year.

The direct-loan program is