Stronger Actions Needed To Recover $730 Million in Defaulted National Direct Student Loans
HRD-81-124
Published: Sep 30, 1981. Publicly Released: Sep 30, 1981.
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Highlights
The loans of the National Direct Student Loan Program are made from revolving funds maintained by participating schools which are responsible for making loans and collecting repayments. The Federal Government provides 90 percent of the moneys for the revolving funds, while the schools provide 10 percent. The program has been plagued by a high default rate. GAO reviewed the program to determine how well schools are carrying out their responsibilities for administering and collecting student loans and to identify Department of Education actions for collecting defaulted loans forwarded to it by participating schools.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Education | The Secretary of Education should determine whether submissions of National Direct Student Loans to the Department of Education for collection earlier than the statutory 2-year time limit would be beneficial to collection efforts. |
Please call 202/512-6100 for additional information.
|
| Department of Education | The Secretary of Education should monitor the Department of Education's use of private collection agencies to insure that their use is the most cost-effective means of collecting defaulted student loans. |
Please call 202/512-6100 for additional information.
|
| Department of Education | If earlier submissions of National Direct Student Loans to the Department of Education for collection would be beneficial, the Secretary of Education should propose legislation to allow schools to submit defaulted loans as soon as possible after completion of required collection activities. |
Please call 202/512-6100 for additional information.
|
| Department of Education | The Secretary of Education should make sure that any reassessment should consider the collection program that was in place in one Department of Education region that was returning approximately $6 for every $1 spent. |
Please call 202/512-6100 for additional information.
|
| Department of Education | The Department of Education should reassess the economic feasibility of its plan to use private collection agencies to insure that their use is the most cost-effective means of collecting defaulted student loans. |
Please call 202/512-6100 for additional information.
|
| Department of Education | The Department of Education should monitor the performance of its collection contractors to insure that the collection of defaulted loans is being carried out in a manner that will return the most Federal dollars at the least cost to the Government. |
Please call 202/512-6100 for additional information.
|
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Topics
Collection proceduresColleges and universitiesEducation or training costsFinancial managementLoan defaultsProposed legislationStudent financial aidStudent loansSchoolsLoan default