Guaranteed Student Loans:

Actions to Ensure Continued Student Access to Subsidized Loans

HEHS-95-64: Published: Feb 24, 1995. Publicly Released: Feb 24, 1995.

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Pursuant to a congressional request, GAO reviewed how recent legislative changes have affected the availability of federally subsidized Stafford student loans, focusing on: (1) the arrangements guaranty agencies have to provide loans to eligible borrowers; and (2) Department of Education efforts to ensure continued student access to subsidized Stafford loans.

GAO found that: (1) eligible students will have difficulty obtaining access to subsidized loans due to recent changes to the Federal Family Education Loan program (FFELP) and the introduction of the Federal Direct Student Loan program; (2) most guaranty agencies have made arrangements to provide loans to students that have difficulty obtaining loans; (3) the Department of Education has made arrangements with Sallie Mae and a new guaranty agency to make loans if guaranty agencies are unable to provide guarantees to lenders; (4) although it is difficult to predict how these arrangements will affect loan access after fiscal year (FY) 1995, FFELP administrators believe that there is little or no risk of widespread loan access problems through FY 1995; (5) Education has several options to ensure students' access to subsidized loans if its financial arrangements prove inadequate; and (6) the issue of student loan access may need to be reevaluated in the future, since it is too early to know whether lenders will continue to provide subsidized loans to eligible borrowers.

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