Estimates of the Cost of Federal Credit Programs in 2024
CBO estimates the costs of federal credit programs in 2024 in two ways—following procedures prescribed by the Federal Credit Reform Act and using a fair-value approach, which measures the market value of the government’s obligations.
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 2024.
The report shows two kinds of estimates: those currently used in the federal budget, which are made by following the procedures specified in 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 2024 would cost the federal government $10.9 billion over their lifetime. But using the fair-value approach, CBO estimates that those loans and guarantees would have a lifetime cost of $76.7 billion. More than 60 percent of the difference between those amounts is attributable to three sources:
Guarantees made by Fannie Mae and Freddie Mac. Analyzed on a FCRA basis, those guarantees would save the federal government $13.4 billion but would cost $8.3 billion on a fair-value basis.
The Department of Housing and Urban Development’s (HUD’s) loan and loan guarantee programs. On a FCRA basis, those programs are projected to save $2.2 billion but to cost $11.4 billion on a fair-value basis.
The Department of Education’s student loan programs. Those programs are projected to cost $19.3 billion on a FCRA basis but to cost $25.4 billion on a fair-value basis.