Stafford Student Loans: Millions of Dollars in Loans Awarded to Ineligible Borrowers
IMTEC-91-7
Published: Dec 12, 1990. Publicly Released: Jan 24, 1991.
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Highlights
Pursuant to a congressional request, GAO evaluated the Department of Education's database on Stafford student loans and how Education could use such data to prevent loan abuses.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Education | The Secretary of Education should direct guaranty agencies to: (1) ensure that their student-loan data are as accurate and complete as practical, with special emphasis given to data on defaulted borrowers; and (2) provide updated information to Education. |
Closed – Implemented
Education stated that it has directed guaranty agencies to submit accurate and updated information to the Department. Education considered this recommendation closed as of December 23, 1991.
|
| Department of Education | The Secretary of Education should report the ability of ineligible borrowers to obtain loans as a material internal control weakness under the Federal Managers' Financial Integrity Act (FMFIA). |
Closed – Implemented
In its annual assurance letter to the President and Congress, dated December 31, 1990, on the adequacy of the department's internal control and financial systems, Education reported the ability of ineligible borrowers to obtain loans as a material internal control weakness under FMFIA.
|
| Department of Education | The Secretary of Education should take immediate action to analyze the data it now has and, until the National Student Loan Data System is developed and implemented, provide to guaranty agencies on a periodic basis the data needed to prevent defaulters from obtaining new loans. This information should also be used to stop and recover federal interest payments on loans obtained by defaulted borrowers. |
Closed – Implemented
Tape dump cross-match reports for fiscal year (FY) 1990, based on FY 1990 tape dump submissions, are being mailed to guaranty agencies on an annual basis. Education also issued instructions to gurantee agencies on using this type of information. Education considered this recommendation closed as of September 20, 1991.
|
| Department of Education | The Secretary of Education should take immediate action to develop a more comprehensive annual report that gives guaranty agencies the data they need to more efficiently detect loan limit abuses. In addition, the Secretary of Education should require guaranty agencies to use the report. |
Closed – Implemented
In October 1991, guaranty agencies were notified that they would receive a GSL national claims file containing claims data from the most current FY tape dump. They were advised to use the file to discover and resolve errors associated with the data through contact with other agencies, and to identify borrowers who are eligible to receive subsequent loans. The tapes were sent by November 27, 1991.
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| Office of Inspector General of the Department of Education | The Office of Inspector General, Department of Education, should follow up on the data and documents GAO provided on defaulters who have obtained new loans and take appropriate action. |
Closed – Implemented
Investigations have been closed or initiated on all 50 cases.
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Topics
College studentsDatabasesFraudGovernment guaranteed loansLoan defaultsProgram abusesRisk managementStudent financial aidStudent loansStudents