CBO has estimated the budgetary costs of the Department of Education’s student loan programs, the Export-Import Bank’s (Ex-Im Bank’s) credit programs, and the Federal Housing Administration’s (FHA’s) single-family mortgage guarantee program using two different approaches. In one, cost is based on an estimate of the market value of the federal government’s obligations, termed a fair-value approach. Those estimates are compared with ones reflecting the procedures currently used in the federal budget as prescribed by the Federal Credit Reform Act of 1990 (FCRA). CBO’s fair-value and FCRA estimates are based on the program terms and outcomes—including the volume and amount of lending, fees, and borrowers’ rates of repayment and default—that are expected to prevail under current law.
For fiscal years 2015 to 2024, CBO found that under current law:
- The Department of Education’s four largest student loan programs would yield budgetary savings of roughly $135 billion under FCRA accounting but cost roughly $88 billion on a fair-value basis (see the figure below);
- Ex-Im Bank’s six largest programs would generate budgetary savings of $14 billion under FCRA accounting but cost $2 billion on a fair-value basis; and
- FHA’s single-family mortgage guarantee program would provide budgetary savings of $63 billion under FCRA accounting but cost $30 billion on a fair-value basis.
CBO used its own projections of the volume of loans and cash flows for the Department of Education’s student loan programs and FHA’s single-family mortgage guarantee program because those estimates are a routine part of its baseline budget projections. However, because CBO does not ordinarily project the detailed cash flows required to estimate the costs for most other federal credit programs, CBO relied on the Export-Import Bank’s projections of those cash flows for this analysis of the bank’s programs.