The debate rages over the viability of the FFELP vs. the Direct Lending Program.  Which one costs taxpayers more is seemingly at the heart of the debate.  FFELP Proponents had to cringe when an audit of the Kentucky Higher Education Student Loan Corporation found that the company might have to repay over $9 million to the U.S. Department of Education. According to the audit, KHESLC may have overbilled the federal government for loan subsidies for loans financed with tax-exempt bonds.  This audit is similar to those that occurred at other entities utilizing tax-exempt bond financing such as Nelnet, PHEAA/AES and New Mexico Educational Assistance Foundation.  The controversy surrounds a federal regulation allowing lenders to bill the government for subsidies to exact a 9.5 percent return.  The question in these audits is how long the lenders were allowed to bill the “9.5 floor” subsidy.