The General Accounting Office reported Thursday that 34% of the $10.5 billion in direct loans made by the Farm Services Agency in 1995 were delinquent.

Borrowers who owed more than $1 million had the most trouble repaying their loans. Eighty-eight percent of them were delinquent, GAO found, while the rate for smaller loans was 33%.

The default rate for guaranteed loans was considerably lower. GAO reported that only 4% of the $5.9 billion of guaranteed loans were delinquent in 1995.

GAO said the government lost $1.1 billion in 1996 by forgiving the debts of direct loan recipients and $42 million from guaranteed loan recipients.

The Farm Services Agency, a part of the U.S. Department of Agriculture, is the lender of last resort to the agricultural community. It is the successor to the Farmers Home Administration.

The report was requested by Senate Agriculture Committee Chairman Richard G. Lugar.

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