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    Subject Term: "Government guaranteed loans"

    6 publications with a total of 23 open recommendations including 1 priority recommendation
    Director: Melissa Emrey-Arras
    Phone: (617) 788-0534

    5 open recommendations
    Recommendation: To help ensure quality information is conveyed to servicemembers about how the Servicemembers Civil Relief Act (SCRA) interest rate cap applies to student loans, the Secretary of Defense should direct the secretaries of each service branch, and work with other secretaries as appropriate, to ensure that all information about the SCRA interest rate cap for student loans is accurate when provided to servicemembers and to those who work with servicemembers to help them obtain SCRA benefits, including information contained in outreach materials.

    Agency: Department of Defense
    Status: Open

    Comments: The Department of Defense (DOD) disagreed with this recommendation believing it to be unnecessary because it is already providing accurate information. Specifically, DOD noted that the information provided in several documents GAO reviewed is accurately based on statute whereas Education's updated requirement to automatically apply the cap is based on policy that could change in the future. Moreover, the automated process applies only to federal and commercial FFEL student loans in contrast to other types of debt. DOD said that providing information based on statute rather than policy would cause less confusion and was a better approach than what we recommend. However, our report noted that Education formalized the automated process through federal regulations, effective July 2016, which legally require servicers to use this process for all federal and commercial FFEL loans. In addition, DOD said it was unable to verify whether DOD's Military OneSource website inaccurately states that the SCRA rate cap does not apply to commercial FFEL loans. However, our searches of the website still turned up this inaccuracy. DOD said it would look into a means of verifying website information but that in the meantime, it is satisfied that its training provides correct information. Given that Military OneSource is a key source of information for servicemembers and that some documents DOD provided state that the SCRA rate cap does not apply to student loans, we continue to believe that servicemembers are not always receiving accurate and up-to-date information.
    Recommendation: To ensure that all eligible servicemembers with student loans receive the SCRA interest rate cap, the Attorney General should direct the Department of Justice to consider modifying its proposed changes to SCRA to require use of the automatic eligibility check for private student loans.

    Agency: Department of Justice: Office of the Attorney General
    Status: Open

    Comments: The Department of Justice (DOJ) stated that its current package of proposed legislative changes provides benefits to servicemembers with all kinds of loans, including private student loans. Rather than requiring servicemembers to submit written notice and a copy of military orders, they need only give oral or written notice of eligibility for the cap to their creditors. Creditors would then have to search the Department of Defense's records to verify the servicemembers' military service and apply the SCRA interest rate cap, when applicable. DOJ believes that these changes would significantly benefit all servicemembers with loans while providing a uniform standard for all types of creditors. The department added that it will consider its proposed changes to SCRA in future legislative proposals and plans to obtain feedback from stakeholders on how to improve SCRA's protections for servicemembers. However, as stated in our report, servicemembers with private student loans would still need to be aware of the rate cap in order to give notice, whether written or oral. Therefore, we encourage DOJ to consider updating its current proposal to require use of the automatic eligibility check by all student loan lenders and servicers. Not only would this ensure that servicemembers with private student loans receive a benefit for which they are eligible, but also that the interest rate cap is applied consistently across all types of student loans. The agency said that it would consider these changes to the SCRA in future legislative proposals and plans to obtain feedback from stakeholders on how the agency can propose to improve the SCRA's protections for servicemembers. However, as stated in our report, servicemembers with private student loans would still need to be aware of the rate cap in order to give notice, whether written or oral. Therefore, we encourage DOJ to consider updating its current proposal to require use of the automatic eligibility check by all student loan lenders and servicers. Not only would this ensure that servicemembers with private student loans receive a benefit for which they are eligible, but also that the interest rate cap is applied consistently across all types of student loans.
    Recommendation: To enhance customer service, the Secretary of Education should direct the Office of Federal Student Aid to identify ways to modify the data collected in its unified borrower complaint system to allow the agency to more precisely identify and analyze complaints specifically about the SCRA interest rate cap.

    Agency: Department of Education
    Status: Open

    Comments: The Department of Education said it is committed to accurately tracking the types of complaints it receives and will create a complainant subcategory for SCRA under the "Military and Veterans Benefit" category. In addition, it will continue to run periodic key word searches to identify other complaints that may have been miscategorized by the complainant, related to the requirements of the SCRA, and ensure that they are considered appropriately. GAO will consider closing this recommendation when the department has provided evidence that it has completed these efforts.
    Recommendation: To better ensure that servicemembers with private student loans benefit from the SCRA interest rate cap, the Director of the Consumer Financial Protection Bureau and the Attorney General of the Department of Justice should coordinate with each other, and with the four federal financial regulators, as appropriate, to determine the best way to ensure routine oversight of SCRA compliance for all nonbank private student loan lenders and servicers. If CFPB and DOJ determine that additional statutory authority is needed to facilitate such oversight, CFPB and DOJ should develop a legislative proposal for Congress.

    Agency: Consumer Financial Protection Bureau
    Status: Open

    Comments: The Consumer Financial Protection Bureau (CFPB) stated that it is committed to working with the Department of Justice (DOJ) and federal financial regulators, when possible, to facilitate oversight of SCRA compliance and that it will support all relevant federal agencies in using their respective authorities to identify and address SCRA violations as efficiently and effectively as possible. While CFPB coordinates with DOJ and other federal regulators in general, there is still no single agency authorized to enforce SCRA compliance among nonbank private student loan lenders and servicers, and no entity is conducting onsite supervisory reviews of these lenders and servicers. In addition, while CFPB may refer complaints from servicemembers about the SCRA rate cap for private student loans to DOJ and other financial regulators, we believe this does not constitute routine, proactive oversight and also presumes servicemembers are aware of the SCRA rate cap. GAO will consider closing this recommendation when the bureau has provided evidence of actions it has taken to facilitate routine oversight of SCRA compliance for all nonbank private student loan lenders and servicers.
    Recommendation: To better ensure that servicemembers with private student loans benefit from the SCRA interest rate cap, the Director of the Consumer Financial Protection Bureau and the Attorney General of the Department of Justice should coordinate with each other, and with the four federal financial regulators, as appropriate, to determine the best way to ensure routine oversight of SCRA compliance for all nonbank private student loan lenders and servicers. If CFPB and DOJ determine that additional statutory authority is needed to facilitate such oversight, CFPB and DOJ should develop a legislative proposal for Congress.

    Agency: Department of Justice: Office of the Attorney General
    Status: Open

    Comments: The Department of Justice (DOJ) believes that it is in full compliance with this recommendation and that the four federal financial regulators do not have statutory authority to examine nonbank private student loan lenders and servicers unaffiliated with a depository institution. DOJ stated that it already coordinates extensively with the Consumer Financial Protection Bureau (CFPB) and the financial regulators concerning SCRA compliance through such mechanisms as referrals from CFPB for any SCRA-related violations and access to its consumer complaint database, and regular meetings with CFPB, and that it will continue to be built upon these efforts. While these mechanisms are commendable, GAO believes they do not constitute exercising routine oversight of nonbank private student loan lenders and servicers who are not affiliated with a depository institution. We believe that additional interagency coordination, including working with CFPB to seek additional statutory authority, as needed, is necessary to ensure routine SCRA compliance.
    Director: Mathew Scirè
    Phone: (202) 512-8678

    8 open recommendations
    Recommendation: To improve compliance with OMB Circular A-129 standards and strengthen management and oversight of the guarantee program, and to enhance screening of loan guarantee applicants, the Secretary of Agriculture should direct the Undersecretary for Rural Development to complete steps to obtain access to Treasury's Do Not Pay portal and establish policies and procedures to deny loan guarantees to applicants who are subject to administrative offsets for delinquent child support payments.

    Agency: Department of Agriculture
    Status: Open

    Comments: As of August 2017, Rural Development said it was in the process of gaining access to Treasury's Do Not Pay portal in order to conduct the recommended screening of loan guarantee applicants.
    Recommendation: To improve compliance with OMB Circular A-129 standards and strengthen management and oversight of the guarantee program, and to strengthen oversight of lenders and servicers, the Secretary of Agriculture should direct the Undersecretary for Rural Development to develop and publish in the Federal Register qualification requirements for the principal officers of lenders and servicers seeking initial or continued approval to participate in the guarantee program.

    Agency: Department of Agriculture
    Status: Open

    Comments: As of August 2017, Rural Development said it had drafted a regulatory work plan to propose qualification requirements for principal officers of lenders and servicers.
    Recommendation: To improve compliance with OMB Circular A-129 standards and strengthen management and oversight of the guarantee program, and to strengthen oversight of lenders and servicers, the Secretary of Agriculture should direct the Undersecretary for Rural Development to develop and publish in the Federal Register capital and financial requirements for guarantee program lenders that are not regulated by a federal financial institution regulatory agency.

    Agency: Department of Agriculture
    Status: Open

    Comments: As of August 2017, Rural Development said it had drafted a regulatory work plan to propose lender capital and financial requirements.
    Recommendation: To improve compliance with OMB Circular A-129 standards and strengthen management and oversight of the guarantee program, and to strengthen oversight of lenders and servicers, the Secretary of Agriculture should direct the Undersecretary for Rural Development to establish standing policies and procedures to help ensure that the agency reviews the eligibility of lenders and servicers participating in the guarantee program at least every 2 years.

    Agency: Department of Agriculture
    Status: Open

    Comments: As of August 2017, Rural Development said it was planning to automate reviews of lender eligibility every 2 years, but in the meantime was using a manual process. We will update the status of this recommendation when Rural Development provides standing policies and procedures regarding the frequency of its lender and servicer eligibility reviews.
    Recommendation: To improve compliance with OMB Circular A-129 standards and strengthen management and oversight of the guarantee program, and to strengthen risk assessment and reporting, the Secretary of Agriculture should direct the Undersecretary for Rural Development to improve performance measures comparing RHS and the Federal Housing Administration loan performance, potentially by making comparisons on a cohort basis and limiting comparisons to loans made in similar geographic areas.

    Agency: Department of Agriculture
    Status: Open

    Comments: As of August 2017, Rural Development said it had hired a contractor to develop more meaningful performance measures.
    Recommendation: To improve compliance with OMB Circular A-129 standards and strengthen management and oversight of the guarantee program, and to strengthen risk assessment and reporting, the Secretary of Agriculture should direct the Undersecretary for Rural Development to develop risk thresholds for the guarantee program, potentially in the form of maximum portfolio- or loan-level loss tolerances.

    Agency: Department of Agriculture
    Status: Open

    Comments: Rural Development hired a contractor to help establish risk thresholds for the guarantee program. The contractor's October 2016 report developed and recommended portfolio-level and loan-level risk thresholds (values that trigger consideration of policy adjustments) and also recommended that program officials conduct stress tests to validate that each recommended risk threshold was appropriate for the program's overall risk appetite. As of August 2017, Rural Development had not provided documentation that it had validated and implemented the risk thresholds.
    Recommendation: To improve compliance with OMB Circular A-129 standards and strengthen management and oversight of the guarantee program, and to strengthen risk assessment and reporting, the Secretary of Agriculture should direct the Undersecretary for Rural Development to identify issues for increased management focus in high-level dashboard reports.

    Agency: Department of Agriculture
    Status: Open

    Comments: As of August 2017, Rural Development had not provided examples of high-level dashboard reports that clearly identify issues for increased management focus.
    Recommendation: To improve compliance with OMB Circular A-129 standards and strengthen management and oversight of the guarantee program, and to more effectively fulfill the requirements for conducting program reviews described in OMB Circular A-129, the Secretary of Agriculture should direct the Undersecretary for Rural Development to develop procedures for selecting RD credit programs for review based on risk and establish a prioritized schedule for conducting the reviews.

    Agency: Department of Agriculture
    Status: Open

    Comments: As of August 2017, Rural Development said that its Chief Risk Officer was working to establish procedures for selecting Rural Development credit programs for review based on risk, including a prioritized schedule.
    Director: John Neumann
    Phone: (202) 512-3841

    1 open recommendations
    Recommendation: To better ensure that the activities carried out under the ITM program do not duplicate the efforts of other federal loan guarantee programs, such as SBA's 7(a) program, the Secretary of Commerce should direct EDA to work with SBA and NIST to further identify any gaps in capital access that may be present that the program could fill, and then develop marketing materials and conduct outreach to help target those gaps.

    Agency: Department of Commerce
    Status: Open

    Comments: Partially addressed. As of November 2016 the Economic Development Administration (EDA) had begun taking action on GAO's February 2016 recommendation to work with SBA and NIST to identify gaps in capital access and develop marketing materials and conduct outreach based on any gaps identified for the Federal Loan Guarantees for Innovative Technologies in Manufacturing program (ITM). Due to delays in establishing the program, however, these efforts are still in progress. According to EDA officials, as of November 28, 2016 EDA contractors working on the ITM program had held a preliminary discussion with SBA to discuss program marketing, outreach and potential gaps in capital access that the ITM program may be able to fill, among other topics, but had not yet initiated additional coordination with NIST. We continue to believe that coordination with SBA and NIST to identify gaps in capital access, and then marketing the program to target those gaps could help EDA ensure that ITM program activities do not duplicate the efforts of other federal loan guarantee programs.
    Director: Kimberly M. Gianopoulos
    Phone: (202) 512-8612

    1 open recommendations
    Recommendation: To further improve OPIC's monitoring processes, the President and CEO of OPIC should assess the current monitoring processes to ensure that the risk associated with the use of client-reported data and limited site visits for monitoring is acceptable for meeting OPIC's program goals.

    Agency: Overseas Private Investment Corporation
    Status: Open

    Comments: In written comments on the draft report, the Overseas Private Investment Corporation (OPIC) concurred with the recommendation. In February 2017, OPIC executed two contracts with an external group to assist it in assessing the Office of Information Policy's current monitoring processes to ensure that the risks associated with the use of client-reported data and limited site visits for monitoring are acceptable and meet OPIC's program goals. The work is currently underway.
    Director: William Shear
    Phone: (202) 512-8678

    6 open recommendations
    including 1 priority recommendation
    Recommendation: To improve management of the Small Business Administration and to ensure that SBA assesses the effectiveness of its programs, the SBA Administrator should prioritize resources to conduct additional program evaluations.

    Agency: Small Business Administration
    Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
    Recommendation: To improve management of the Small Business Administration and to ensure that SBA fully meets GPRAMA requirements, the SBA Administrator should use the results of additional evaluations it conducts in its strategic planning process and ensure the agency's next strategic plan includes required information on program evaluations, including a schedule of future evaluations.

    Agency: Small Business Administration
    Status: Open
    Priority recommendation

    Comments: SBA officials stated that, as of October 2016, the agency had taken several steps to prioritize resources and establish an implementation plan for future evaluations, including hiring its first lead program evaluator to develop a long-term evaluation agenda and initiating four program evaluations. They stated that once completed, the evaluations would be incorporated into the agency's fiscal year 2018-2022 strategic plan. As of May 2017, SBA had started reviewing guidance on drafting this plan, which is due in February 2018.
    Recommendation: To improve management of the Small Business Administration and to improve SBA's human capital management, the SBA Administrator should incorporate into its next training plan key principles such as goals and measures for its training programs and input on employee development goals.

    Agency: Small Business Administration
    Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
    Recommendation: To improve management of the Small Business Administration and to ensure that SBA's organizational structure helps the agency meet its mission, the SBA Administrator should document the assessment of the agency's organizational structure, including any necessary changes to, for example, better ensure areas of authority, responsibility, and lines of reporting are clear and defined.

    Agency: Small Business Administration
    Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
    Recommendation: To improve management of the Small Business Administration and to improve SBA's program and management guidance, the SBA Administrator should set time frames for periodically reviewing and updating its SOPs as appropriate.

    Agency: Small Business Administration
    Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
    Recommendation: To improve management of the Small Business Administration and to help ensure that SBA's IT operations and maintenance investments are continuing to meet business and customer needs and the agency's strategic goals, the SBA Administrator should direct the appropriate officials to perform an annual operational analysis on all SBA investments in accordance with OMB guidance.

    Agency: Small Business Administration
    Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
    Director: Scire, Mathew J
    Phone: (202) 512-8678

    2 open recommendations
    Recommendation: To strengthen FHA accountability for complying with the Fund's statutory capital requirement, Congress should consider requiring that FHA submit a capital restoration plan and regular updates on plan implementation whenever the capital ratio falls below 2 percent as calculated in the annual actuarial review of the Fund, or the Fund's financial condition does not meet other congressionally-defined requirements.

    Agency: Congress
    Status: Open

    Comments: Congress has not yet acted on this matter for consideration.
    Recommendation: To provide additional perspective on the Fund's financial status, FHA should disclose estimates of the individual cash flows associated with the liability for loan guarantees (premiums, claims, and recoveries), including their value for each year of the 30-year estimation period.

    Agency: Department of Housing and Urban Development: Federal Housing Administration
    Status: Open

    Comments: As of July 2017, HUD has not yet acted on this recommendation.