Fair-Value Estimates of the Cost of Federal Credit Programs in 2019

The federal government supports some private activities by providing credit assistance to individuals and businesses. In this report, CBO estimates the lifetime costs that are projected to be incurred by those federal credit programs in 2019. The report shows two kinds of estimates: estimates that were created by following procedures prescribed by the Federal Credit Reform Act of 1990 (FCRA), most of which were produced by other agencies; and estimates newly produced by CBO that account for the market value of the government’s obligations, which are called fair-value estimates.

Using FCRA procedures, CBO estimates that new loans and loan guarantees issued in 2019 would result in savings of $37.4 billion. But using fair-value procedures, CBO estimates that those loans and guarantees would have a lifetime cost of $37.9 billion. More than 80 percent of the difference between those amounts comes from three sources:

• The guarantees that Fannie Mae and Freddie Mac will make in 2019, analyzed on a FCRA basis, are projected to save the federal government about $23.5 billion. Under fair-value accounting, however, the guarantees would cost about $2.5 billion.
• The Department of Education’s student loan programs are projected to save $4.1 billion on a FCRA basis but to cost $16.1 billion on a fair-value basis.
• The Department of Housing and Urban Development’s (HUD’s) loan and loan guarantee programs are projected to save $9.5 billion on a FCRA basis but to cost $7.1 billion on a fair-value basis.