An association of loan lenders say that student loans offered by independent companies are cheaper for taxpayers than loans distributed directly by the federal government.

The argument — published in a study by America’s Student Loan Providers — attempts to debunk findings released earlier by the Government Accountability Office that endorsed direct loans, which compete with those offered by private lenders. According to the industry study, loans issued by Federal Family Education Loans, an umbrella program that administers several borrowing programs such as the Parent Plus and federal Stafford loans, cost the government $7 for every $100 in loans from 1994 to 2002. By comparison, the study found that costs of direct loans was $9.16.

The direct lending program was created in 1993, when lawmakers sought an alternative to guaranteed loans, through which banks and private lenders offer loans to students and parents that are subsidized by the U.S. government. Because direct loans cut out middlemen, private lenders have been battling the program to keep their own businesses afloat.

ASLP’s report attacked federal information that showed direct lending to be cheaper than guaranteed loans. The difference can be explained by tax revenues, not included in the government’s numbers, from the two programs, and government estimates based on overly optimistic projections of future interest rates, according to ASLP Executive Director Kevin Bruns.

“Sadly, [FFEL has] become a partisan punching bag, almost entirely because of the erroneous impression left by government cost estimates,” he stated in a press release. “The truth is that guaranteed student loans are a better deal for taxpayers.”

Last fall, the GAO, a federal investigative agency, released an analysis showing that direct lending costs have “generally remained lower” than guaranteed programs’ costs. However, even the the agency admitted in the report that its estimates were incomplete.

“Given the uncertainty identified by the GAO, it’s no surprise the report doesn’t include any specific recommendations,” said Tom Davis (R-Va.), chairman of the U.S. House Committee on Government Reform, in a press release on May 9. “Until we get answers, it would be irresponsible for policymakers to promote one program over the other when so many schools have continued to identify competition as the key benefit that comes from maintaining two loan programs.”