Student Loans: Default Rates Need To Be Computed More Appropriately
HEHS-99-135
Published: Jul 28, 1999. Publicly Released: Aug 27, 1999.
Skip to Highlights
Highlights
Pursuant to a congressional request, GAO reviewed the Department of Education's method of calculating a school's student loan default rate, focusing on: (1) whether there has been an increase in the number of borrowers who entered repayment but subsequently received deferments or forbearances; (2) what effect would excluding borrowers whose loans were in deferment or forbearance have on the most recent default rate calculation; and (3) whether additional schools would have exceeded the 25-percent default rate threshold under the alternative method of calculating the default rate.
Recommendations
Matter for Congressional Consideration
| Matter | Status | Comments |
|---|---|---|
| Congress may wish to consider amending section 435(m) of the Higher Education Act of 1965, as amended, to entirely exclude from the annual calculation of school default rates borrowers who are not in repayment by the end of a default cohort period because they have loans in deferment or forbearance. |
Closed – Not Implemented
|
Congress held hearings on the reauthorization of the Higher Education Act (HEA) in 2006, but did not reauthorize it, relying instead on temporary extensions. In 2007, the House passed H.R. 4137, College Opportunity and Affordability Act of 2008, to amend and extend HEA. In February 2008, this bill was received in the Senate and referred to its Committee on Health, Education, Labor, and Pensions. As of June 2008, the Senate has not voted on this bill or proposed a companion bill. |
| Congress may wish to require the Secretary of Education to develop and implement procedures to ensure that borrowers excluded from a cohort's default rate calculation because of an authorized deferment or forbearance are included in a future cohort after they have resumed making payments on their loans. |
Closed – Not Implemented
|
Congress held hearings on the reauthorization of the Higher Education Act (HEA) in 2006, but did not reauthorize it, relying instead on temporary extensions. In 2007, the House passed H.R. 4137, College Opportunity and Affordability Act of 2008, to amend and extend HEA. In February 2008, this bill was received in the Senate and referred to its Committee on Health, Education, Labor, and Pensions. As of June 2008, the Senate has not voted on this bill or proposed a companion bill. |
Full Report
Office of Public Affairs
Topics
Colleges and universitiesDelinquent loansGovernment guaranteed loansLoan defaultsLoan repaymentsProprietary schoolsStudent loansStudent loan defaultSchoolsStudent loan repayment program