Estimates of the Cost of Federal Credit Programs in 2023

The federal government supports some private activities by offering credit assistance to individuals and businesses. That assistance is provided through direct loans and guarantees of loans made by private financial institutions. In this report, the Congressional Budget Office estimates the lifetime costs of new loans and loan guarantees that are projected to be issued in 2023. The report shows two kinds of estimates: those currently used in the federal budget, which are made by following the procedures prescribed by the Federal Credit Reform Act of 1990 (FCRA), and those referred to as fair-value estimates, which measure the market value of the government’s obligations. Most of the FCRA estimates were produced by other federal agencies; the FCRA estimates for the largest federal credit programs and all of the fair-value estimates were produced by CBO.

Using FCRA procedures, CBO estimates that new loans and loan guarantees issued in 2023 would result in savings of $41.1 billion. But using the fair-value approach, CBO estimates that those loans and guarantees would have a lifetime cost of $51.1 billion. About three-quarters of the difference between those amounts is attributable to three sources:

• The guarantees that Fannie Mae and Freddie Mac are projected to make in 2023, which, analyzed on a FCRA basis, would save the federal government $33.8 billion but would cost $3.9 billion on a fair-value basis;
• The Department of Housing and Urban Development’s (HUD’s) loan and loan guarantee programs, which are projected to save $10.3 billion on a FCRA basis but to cost $12.4 billion on a fair-value basis; and
• The Department of Education’s student loan programs, which are projected to save $1.4 billion on a FCRA basis but to cost $7.7 billion on a fair-value basis.