Financial Management: Legislation to Improve Governmentwide Debt Collection Practices

GAO discussed proposed legislation to improve governmentwide debt collection practices. GAO noted that: (1) the federal government reported $241 billion in nontax receivables, most of which were the result of direct loans and loans acquired as a result of claims paid on defaulted guaranteed loans as of September 30, 1994; (2) it is essential that the federal government make and guarantee creditworthy loans, as well as put effective practices in place to collect the amounts that are owed; (3) the potential for increasing collections through sound debt collection programs can help reduce the deficit; (4) the collection of nontax receivables increased by $8.8 billion between fiscal years 1993 and 1994; (5) in fiscal year 1994, delinquent nontax debt increased by over $5 billion with almost $10 billion in delinquencies reported as write offs; and (6) federal agencies must have a range of tools and authorities to help them minimize the amount of delinquencies and write offs that continue to occur each year and reduce the costs of lending programs.