This document reproduces the testimony on the subject of a recent General Accounting Office report on the relative federal cost of guaranteed and direct student loans in postsecondary and higher education. The comments focus on the potential federal savings associated with substituting Stafford loans with direct loans and the effect that a direct loan program could have on the administrative functions of the Department of Education and postsecondary educational institutions. Following introductory comments, the testimony addresses the administrative complexity of the Stafford loan program. The discussion goes on to look at a proposed direct loan program and how its administration would compare with the Stafford program. The testimony argues that the proposed direct loan system would be significantly simpler to administer and goes on to assert that such a program would save over one billion dollars in the first year. In addition, the argument points out, layers of oversight would be reduced and school administrative functions would be simplified. The discussion concludes by identifying related issues that still need clarification. Three figures are included. (JB)