A Move to Paperless Processing Overall per-loan Federal costs for the Direct Loan program are dramatically lower than those for guaranteed loans even when higher Federal Direct Loan administrative costs are considered. However, our administrative costs will grow dramatically unless we undertake radical change. Modern information technology is our solution. Let me give you an example. The more we can switch from paper to electrons, the more we can stop cost growth.
Electronic applications are much easier on the applicants, too.
They aren't even shown questions that don't pertain to them. Otherwise, they won't use them and we won't cut costs. There have been some misunderstanding and controversy over the way we are modernizing, so I want to take a minute to explain our approach. The problem we face is a bunch of old, stand-alone systems that were created over time as each grant and loan program was enacted. It is bad enough that we have to deal with all those old systems in the back room.