Examination of Financial Operations for Fiscal Year 1975 Shows Need for Improvements in the Guaranteed Student Loan Program
FOD-76-23: Published: Feb 10, 1977. Publicly Released: Feb 10, 1977.
- Full Report:
The Student Loan Insurance Fund, administered by the Office of Education, is the mechanism used to finance Federal insurance and reinsurance for loans made under the Guaranteed Student Loan program. The accounting system for the Guaranteed Student Loan program is unsatisfactory.
Examination of the financial statements of the Fund for the year ended June 30, 1975, revealed that the financial statements do not fairly present the financial position of the Student Loan Insurance Fund at June 30, 1975, and the results of its operations and changes in financial position in conformity with principles. Many amounts reported on the statements lacked adequate support, and support for other amounts conflicted with the reported amounts. The accounting system for the Guaranteed Student Loan program needs to provide more complete, accurate, and timely information useful to management, the Congress, and the public.
Recommendation for Executive Action
Comments: Please call 202/512-6100 for additional information.
Recommendation: The Secretary of HEW should require the Office of Education to: increase income by changing the method of computing insurance charges and recalling certain interest-free advances to guarantee agencies; provide consolidated cost information on the Guaranteed Student Loan program; improve controls over advances to guarantee agencies and overpayments to lenders for interest and special allowance subsidies; and improve the quality of financial data by promptly recording all cash transactions, reconciling general ledger accounts and subsidiary records, establishing more accurate loss rates, and verifying computations.