Summary

Cost implications of subsidized and guaranteed loans made by the Farmers Home Administration (FmHA) were reviewed and a methodology for long-term cost projections was developed by selecting the major lending programs in the agency and identifying the cost components for each.

In fiscal year 1979 the authorization request exceeded $7 billion, but FmHA did not identify the future financial obligations for each loan program or for all programs. Some programs have a higher default loss rate, and some use proportionally more FmHA-provided financial advice than others. Loan program costs were estimated by identifying the incremental costs that would be incurred with the addition of a reasonable increase in funding.