The National Direct Student Loan Program Requires More Attention by the Office of Education and Participating Institutions

HRD-77-109: Published: Jun 27, 1977. Publicly Released: Jun 27, 1977.

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The National Direct Student Loan (NDSL) program, one of three student financial aid programs administered by the Office of Education (OE), provides for the establishment of loan funds at postsecondary educational institutions so that they can make loans to qualified students.

Several problems were noted in the administration of the program. Because OE has not provided adequate program guidance for participating institutions, there has been a lack of understanding regarding requirements. The most current NDSL program manual, published in 1967, was out of print, and did not contain current program regulations. It was also found that in some cases students were receiving veterans' benefits in addition to student loans. Another area in need of improvement was in loan servicing and collection. Concerns were expressed about increasing delinquency rates and failure to adhere to collecting procedures. OE is responsible for monitoring the performance of participating institutions, but it has not always checked on the accuracy of information submitted by institutions, and followups on audits have not been adequate.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Commissioner of Education should: (1) provide necessary program guidance to institutions; (2) attempt to collect NDSL accounts before writing them off; (3) instruct financial aid officers to coordinate various types of aid received by students; (4) instruct institutions with high delinquency rates to follow prescribed collection procedures; (5) modify the processing of fiscal operations reports to allow for more timely tabulation of data and periodically test accuracy of information; and (6) develop guidelines on conducting on-site reviews.

    Agency Affected:

 

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