Better Cash Management Can Reduce the Cost of the National Direct Student Loan Program

The Department of Health, Education, and Welfare (HEW), through its Office of Education (OE), sponsors three student financial aid programs, one of which is the National Direct Student Loan program. This program provides funds to postsecondary schools for making long-term, low-interest loans to students. Before 1970, OE monitored all aspects of the program including the disbursement of funds to schools and the reasonableness of school balances. Since 1970, when HEW transferred disbursing responsibilities to its federal assistance financing system, OE has not actively monitored the schools' cash balances.