It should also require universities to choose preferred lenders through an open process that guarantees the best rates and treatment for student borrowers.

Thanks to these cuts, the typical student borrower who started college in 2008 will have saved $2,570 over the life of their loan.

But last year, Pratt found that the deal was not so good for its student borrowers.

Specifically, many universities steered student borrowers to "preferred lenders" that charged higher interest rates.

One in 10 student borrowers at public colleges and more than a quarter of the others owed $10,000 to $15,000, the report said.

"If we have to pay back the government, the real-world effect is that our student borrowers' rates will go up."

Mr. Jordan said that nothing in the report showed that student borrowers had suffered.

When the subsidy was first created in 1980, high interest rates made access to loans difficult for student borrowers.

College financial aid offices compile lists of these lenders to recommend to student borrowers.

The same bachelor's degree will cost a student borrower far more than a student who can afford to pay.