College Access and Affordability

College and other postsecondary education—including vocational and graduate programs—play a vital role in supporting economic success for individuals and the nation as a whole. To help expand access to college education, the federal government provided $112 billion in financial aid in FY 2021 through grants, loans, and work-study funds.

However, the amount of federal student loan debt has grown to about $1.6 trillion, and many borrowers have struggled to repay their loans and eventually defaulted. To help address this issue, the Department of Education (Education) should take steps to strengthen its management and oversight of federal student aid programs.

For example:

• To make student loans more affordable, Income-Driven Repayment plans base monthly payments on a borrower’s income and family size, and extend repayment periods. Borrowers in these plans are also eligible for loan forgiveness after 20 or 25 years of qualifying payments. However, Education has had trouble tracking borrowers' payments and hasn't done enough to ensure that all eligible borrowers receive the forgiveness to which they are entitled.
• Colleges can use third-party online program managers to help run their online education programs. These managers often recruit students, in addition to providing other services. Many online managers are paid a share of tuition revenue—an arrangement Education allows only if safeguards against prohibited incentive payments are in place. For example, online managers must provide multiple services and not be paid separately for recruiting. These arrangements are subject to annual audits. However, colleges and auditors lack clear instructions from Education, making it hard to detect violations.
• Education issues and manages the Direct Loan Program, and contractors service these loans. However, Education’s instructions and guidance to loan servicers are sometimes lacking, resulting in inconsistent and inefficient services to borrowers. For example, some contractors don’t understand how to apply over- or underpayments to borrower accounts or how to report adverse credit history to credit bureaus. Education should improve its instructions and guidance to these contractors to safeguard program integrity and improve service to borrowers
• The COVID-19 pandemic has exacerbated college affordability and student loan repayment issues. To help students and borrowers overcome pandemic-related challenges, such as employment loss, it is critical for Education to effectively implement provisions in federal assistance legislation, such as the CARES Act. These provisions offer grants to colleges to provide emergency funding to students affected by the pandemic and temporary relief from federal student loan payments, among other benefits.

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