Direct Student Loans: Selected Characteristics of Participating Schools

GAO discussed the Federal Direct Student Loan Program. GAO noted that: (1) 102 postsecondary schools are participating in the first year of the program; (2) 59 of the 102 schools are making the direct loans themselves while the other schools use alternative originators to make direct loans to their students; (3) the schools are very satisfied with the program; (4) the program enables students to receive their loans faster, reduces program complexity and confusion, and allows schools to have greater control over the loan process; (5) there has been a problem with some schools not timely reporting their loan disbursements to the loan servicer, but this is being resolved; (6) the participating schools represent an aggregate of 5 percent of the fiscal year (FY) 1991 student loan volume; (7) as of March 21, 1995, program participants had not reached their year-two 40-percent loan volume target because some schools decided not to use direct loans exclusively and some large participants withdrew due to a lack of resources and uncertainty about the program's future; and (8) although the Department of Education has proposed accelerating the implementation of direct loans to all schools by the 1997-1998 academic year, several pending bills would cap the direct loans at 40 percent of new loan volume.