While providing students with little or no education in return. High loan default rates received substantial proceeds from such loans Hearings in 1990 had shown that some for-profit trade schools with Students had exceptionally high loan default rates. Schools from federally guaranteed student loan programs if their Initiative, which implemented the Student Loan Default Prevention In 1991, the Department of Education, under its Default Reduction $3.6 billion in 1991, in 1994 the federal government paid out $2.4īillion to make good its guarantee on these defaulted loans. Although annual federal costsįor defaulted student loans have begun to decline from their high of Students completing an educational program or the frequency of their Some of these schools are not overly concerned about their Whose tuition is heavily financed by federally guaranteed student Profits come from student tuition payments, have enrolled students
Some schools, particularly proprietary for-profit trade schools whose = ABBREVįFELP - Federal Family Education Loan Program Reform and Oversight, House of Representatives Resources and Intergovernmental Relations, Committee on Government Report to the Ranking Minority Member, Subcommittee on Human We are unable to accept electronic orders * * Distribution Facility by calling (202) 512-6000, by faxing your * * A printed copy of this report may be obtained from the GAO Document * Tables are included, but may not resemble * * No attempt has been made to display graphic images, although figure * These numbers do NOT correspond with the page * * of these lines indicate the position of each of the subsections in the * * of the text, such as Chapters, Sections, and Appendixes, are * Delineations within the text indicating chapter titles, * * This file contains an ASCII representation of the text of a GAO * of Education National Student Loan Data System of Education Parent Loans for Undergraduate Studentsĭept. of Education Stafford Student Loan Programĭept. of Education Default Reduction Initiativeĭept. TITLE: Student Loan Defaults: Department of Education Limitations Or required to post performance bonds as a condition of filing an Government from these additional costs, schools should be held liableįor additional loan default costs that occur during the appeals process Loan default costs during the appeal process and (4) to protect the More straightforward and less time-consuming (3) these regulatoryĬhanges will not fully protect the government's interest in theseĭisputes, since unscrupulous schools continue to accumulate additional Matters of fact and implementing regulations should make adjudications Increased access to loan information should resolve misunderstandings on That: (1) the 1993 amendments should reduce, but not eliminate,Ĭhallenges to Education's default rate determinations (2) schools' Which limited their ability to detect servicing problems. Schools complained that they had insufficient access to loan information Not agree on what constituted an improperly serviced loan and (6) the Loan defaults were well documented (5) the schools and Education did Rate calculations and failed to exclude improperly serviced loans in itsĬalculations (4) the inaccuracies in Education's databases concerning The schools alleged that Education used erroneous data in its default Issues, of which 10 have been dismissed or terminated by agreement (3) GAO found that: (1) as of September 30, 1994, 601 schools were barredįrom the Federal Family Education Program and 250 schools had pendingĪdministrative appeals challenging Education's default rateĭeterminations (2) 111 schools had filed 22 lawsuits over default rate Sufficient steps to implement the 1993 amendments to the HigherĮducation Act and address the schools' concerns and (3) what needs toīe done to resolve problems with Education's default reduction Their main points of contention (2) whether Education has taken (1) how many schools have contested Education decisions and what are Schools from federally guaranteed student loan programs, focusing on: Pursuant to a congressional request, GAO reviewed the Department ofĮducation's efforts to resolve disputes arising from its debarment of Student Loan Defaults: Department of Education Limitations in Sanctioning Problem Schools Student Loan Defaults: Department of Education Limitations in Sanctioning
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