Educational Assistance Overpayments, a Billion Dollar Problem--A Look at the Causes, Solutions, and Collection Efforts

MWD-76-109: Published: Mar 19, 1976. Publicly Released: Mar 19, 1976.

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A review was conducted of overpayments made to veterans and to dependents of disabled or deceased veterans under the educational assistance programs of the Veterans Administration (VA) to determine the underlying causes of the overpayments, to identify some solutions, and to assess the VA's collection efforts. Overpayments have doubled since 1967. As of December 31, 1975, cumulative overpayments totaled almost $1.4 billion, of which $446 million was overpaid in fiscal year 1975 and $412 million in the first 6 months of fiscal year 1976. The Vietnam Era Veterans' Readjustment Assistance Act of 1972 provided for the advance payment of educational benefits at the start of an enrollment period and monthly prepayment of subsequent benefits during the enrollment period.

The following three primary causes of overpayments were found: 41 percent result from veteran and school delays in reporting training changes, such as dropping classes or withdrawing from school; 22 percent result from the issuance of special payments and poor VA processing practices; and 21 percent result from the prepayment and advance payment provisions of the VA educational assistance law. The other 16 percent of the overpayments result from normal processing requirements, some of which can also be avoided.

Matter for Congressional Consideration

  1. Status: Closed

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

    Matter: Congress may have to reconsider the merits of prepaying veterans for training and return to a post-payment system for educational benefits.

Recommendation for Executive Action

  1. Status: Closed

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

    Recommendation: To alleviate the overpayment problems, VA should notify veterans of their obligation to report status changes promptly. VA should increase guidance and assistance to schools. The approving agencies in States should be provided with guidance on overpayment problems and be furnished with data to show which schools have overpayments. Schools should be more frequently assessed for overpayments caused by their negligent reporting of student changes in training status. Reporting fees should be reevaluated by VA to insure that schools are appropriately reimbursed for required reporting. It would be advisable to increase the involvement of VA on-campus personnel to help schools solve their reporting problems. GAO's prior recommendation to automate the processing of veteran training status changes should be implemented. Special benefit payments which bypass standard computer screening controls should be reduced. The use of teletype transmissions of stop-payment notices should be increased. Since overpayments remaining uncollected have also increased dramatically, VA should improve collection actions by: revising collection letters; taking faster action to collect; and establishing an automatic cross-checking system for matching veterans receiving benefit payments under other programs.

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