Borrower Loan Prepayments: OMB Guidelines Need to Be Strengthened
AFMD-89-19
Published: Jan 11, 1989. Publicly Released: Feb 15, 1989.
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Highlights
In response to a congressional request, GAO evaluated certain aspects of loan prepayment programs that allowed borrowers to pay off their loans at less than the amounts owed, focusing on: (1) statutory authority for prepayment programs; (2) program costs and benefits; (3) differences between loan prepayment programs and collateralized loan sales; (4) the ability of the programs to achieve credit reform objectives; and (5) the adequacy of the Office of Management and Budget's (OMB) guidelines for loan prepayment requirements.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Office of Management and Budget | The Director, OMB, should revise OMB loan asset sale guidelines to require agencies to complete appropriate cost-benefit analyses to determine: (1) what monetary and nonmonetary benefits can be received from loan asset sales and prepayment programs; (2) when the government should hold loans to term or dispose of them through asset sales or prepayments; and (3) which disposal method, sales or prepayments, should be used if the loans are not held to term. |
Closed – Implemented
On November 25, 1988, OMB revised its requirements for Managing Federal Credit Programs, Circular A-129, to require agencies to complete appropriate cost benefit analyses.
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Topics
Cost effectiveness analysisDebt collectionDirect loansFinancial managementLoan repaymentsLoansProgram managementStatutory lawAdvance paymentsInterest rates