Today the Department of Education announced that its new direct lending program has reached the congressionally mandated benchmark of 40 percent in new loan volume for the next academic year. A total of 1,495 schools will participate in this new program. The program will provide $8 billion in loans to two million students in the next school year.
The American people want a federal government that works better, costs less, and expands opportunities for all Americans. The new direct lending program is an important example of reinventing government to better meet the people's needs.
It will reduce complexity and costs for millions of student borrowers. And the option to repay loans as a percentage of income over time will reduce burdens on young families and make it easier for young people to serve their communities and their country.
The new direct lending program is good news for taxpayers as well. Financial analysts in a recent Morgan Stanley newsletter have already described this new program as a "budgetary winner" that will "lower government spending and reduce the deficit." Over the long term, we expect to save taxpayers $4.3 billion once this program is fully up and running. Direct lending represents the most innovative student financial aid program since the creation of the Pell Grant program in 1973, more than 20 years ago.
Government can work better, cost less, and direct lending proves it.