B-199765, JAN 22, 1981

B-199765, JAN 22, 1981

SUBJECT: GAO'S RIGHT OF ACCESS TO BANK RECORDS OF GUARANTEED STUDENT LOAN RECIPIENTS (FILE B-199765; CODE 104503)

GAO EVALUATOR, HRD - ALFRED R. SCHNUPP:

THIS IS IN RESPONSE TO YOUR QUESTION CONCERNING GAO'S RIGHT OF ACCESS UNDER THE GUARANTEED STUDENT LOAN (GSL) PROGRAM TO CERTAIN FAMILY INCOME DATA WHICH MAY BE HELD BY LENDING INSTITUTIONS. WE UNDERSTAND THAT YOU RECEIVED A CONGRESSIONAL REQUEST TO COMPILE STATISTICAL DATA ON THE FAMILY INCOME OF GSL RECIPIENTS USING THE RECORDS OF LENDING INSTITUTIONS. YOU ASKED US WHETHER GAO WOULD HAVE ACCESS TO THIS DATA.

GAO'S RIGHT OF ACCESS TO RECORDS OF LENDING INSTITUTIONS PARTICIPATING IN THE GSL PROGRAM IS LIMITED TO AN INSPECTION OF RECORDS NECESSARY TO ASSURE THE CORRECTNESS OF REPORTS SUBMITTED BY THE INSTITUTIONS TO THE SECRETARY OF EDUCATION. ACCORDING TO A DEPARTMENT OF EDUCATION REPRESENTATIVE, THE REPORTS NOW SUBMITTED BY LENDERS DO NOT CONTAIN FAMILY INCOME DATA SINCE FAMILY INCOME IS NO LONGER A FACTOR IN PROGRAM ELIGIBILITY. CONSEQUENTLY, THERE IS NO BASIS FOR GAO TO CLAIM A RIGHT OF ACCESS TO FAMILY INCOME DATA, IF ANY, IN LENDING INSTITUTION RECORDS.

ANALYSIS:

THE GSL PROGRAM, AUTHORIZED BY TITLE IV, PART B, OF THE HIGHER EDUCATION ACT OF 1965, AS AMENDED, 20 U.S.C. SEC. 1071 ET SEQ., MAKES LOW-INTEREST LOANS AVAILABLE TO POST-SECONDARY STUDENTS TO HELP THEM MEET THEIR EDUCATIONAL EXPENSES. LOANS ARE GUARANTEED BY EITHER STATE AGENCIES (AND REINSURED BY THE FEDERAL GOVERNMENT) OR BY THE DEPARTMENT OF EDUCATION. PRIOR TO NOVEMBER 1, 1978, UNDER THE SUBSIDY PROVISION OF THE PROGRAM THE FEDERAL GOVERNMENT PAID THE INTEREST ON A GSL FOR AN ELIGIBLE STUDENT WHILE THE STUDENT WAS IN A POST-SECONDARY INSTITUTION. AT THAT TIME A STUDENT'S FAMILY INCOME WAS A CENTRAL FACTOR IN DETERMINING ELIGIBILITY FOR FEDERAL INTEREST SUBSIDY PAYMENTS SINCE THE HIGHER EDUCATION ACT IMPOSED A FAMILY INCOME ELIGIBILITY CEILING OF $25,000. SEE 20 U.S.C. SEC. 1078(A)(2)(B) AND (D) (1976).

THE MIDDLE INCOME STUDENT ASSISTANCE ACT, APPROVED NOVEMBER 1, 1978, PUB. L. NO. 95-566, SEC. 5(B), 92 STAT. 2402, 2403, AMENDED THE HIGHER EDUCATION ACT TO REMOVE FAMILY INCOME AS AN ELIGIBILITY FACTOR. COMPARE 20 U.S.C. SEC. 1078(A)(2) (SUPP. III, 1979). THE HOUSE EDUCATION AND LABOR COMMITTEE REPORT ON ITS VERSION OF THE LEGISLATION ENACTED AS PUB. L. NO. 95-566 NOTED IN THIS REGARD:

"*** INSTEAD OF RAISING THE INCOME ELIGIBILITY LEVEL FOR THE INTEREST SUBSIDY FROM $25,000 TO $40,000, THE COMMITTEE REMOVED THE CEILING ENTIRELY.

"APPROXIMATELY 98 PERCENT OF THE STUDENT POPULATION WOULD BE ELIGIBLE FOR THE INTEREST SUBSIDY IF THE ELIGIBILITY CEILING WERE SET AT $40,000. THE COMMITTEE CONCLUDED THAT CONTINUING TO REQUIRE A NEEDS TEST ANALYSIS FOR ALL LOAN APPLICANTS IN ORDER TO DETERMINE THE 2 PERCENT OF THE POPULATION INELIGIBLE FOR INTEREST SUBSIDIES WOULD NOT BE WORTH THE ADDED ADMINISTRATIVE COSTS AND PAPERWORK. ELIMINATING THE INCOME ELIGIBILITY CEILING ENTIRELY, EDUCATIONAL INSTITUTIONS WILL BE RELIEVED OF THE PAPERWORK IN MAKING A NEEDS ANALYSIS AND RECOMMENDATION, THE LOAN APPLICATION FORM WILL BE GREATLY SIMPLIFIED, THE NEED ANALYSIS FORM WILL BE ELIMINATED, AND LENDERS CAN SIMPLIFY ADMINISTRATION OF THESE LOANS SINCE THEY WILL NOT HAVE TO PROVIDE DUAL PROCEDURES FOR SUBSIDIZED AND UNSUBSIDIZED LOANS. ***"

H.R. REP. NO. 95-951, AT 11-12 (1978).

THE HIGHER EDUCATION ACT, 20 U.S.C. SEC. 1082, PROVIDES FOR GAO AUDITS OF THE GSL PROGRAM, BUT DOES NOT GRANT GAO ACCESS TO THE RECORDS OF PARTICIPATING LENDERS. RATHER, SUCH ACCESS IS AFFORDED BY ADMINISTRATIVE REGULATIONS PROMULGATED PURSUANT TO 20 U.S.C. SEC. 1082. THE APPLICABLE REGULATION - 45 C.F.R. SEC. 177.519 (1979) - REQUIRES LENDERS TO KEEP COMPLETE AND ACCURATE RECORDS OF EACH LOAN, INCLUDING CERTAIN SPECIFIED RECORDS. ID. SEC. 177.519(A). IT FURTHER REQUIRES LENDERS TO SUBMIT CERTAIN REPORTS, AS FOLLOWS:

"(B) REPORTS. A LENDER SHALL SUBMIT REPORTS TO THE COMMISSIONER FN1 AT THE TIME AND IN THE MANNER THE COMMISSIONER MAY REASONABLY REQUIRE, INCLUDING BUT NOT LIMITED TO THE FOLLOWING:

"(1) THE LENDER'S MANIFEST FOR FISLP (FEDERAL INSURED STUDENT LOAN PROGRAM) LOANS.

"(2)THE LENDER'S REQUEST FOR PAYMENT OF INTEREST ON STUDENT LOANS.

"(3) THE LENDER'S ANNUAL REPORT ON GUARANTEED STUDENT LOANS OUTSTANDING."

FINALLY THE REGULATION AUTHORIZES GAO ACCESS TO A LENDER'S RECORDS AS FOLLOWS:

"(C) INSPECTIONS. UPON REQUEST, A LENDER SHALL AFFORD THE SECRETARY OF HEALTH, EDUCATION, AND WELFARE, FN1 THE COMPTROLLER GENERAL OF THE UNITED STATES, AND ANY OF THEIR AUTHORIZED REPRESENTATIVES ACCESS TO ITS RECORDS IN ORDER TO ASSURE THE CORRECTNESS OF ITS REPORTS."

THE REGULATIONS DO NOT SPECIFICALLY REQUIRE LENDERS TO MAINTAIN DATA ON FAMILY INCOME. FURTHERMORE, WE HAVE BEEN INFORMED BY A DEPARTMENT OF EDUCATION OFFICIAL THAT THE LENDERS' REPORTS TO THE DEPARTMENT DO NOT, AT PRESENT, INCLUDE ANY FAMILY INCOME DATA. WE WERE ALSO TOLD THAT SINCE THERE IS NO LONGER ANY CONNECTION BETWEEN FAMILY INCOME AND ELIGIBILITY FOR THE FEDERAL SUBSIDY INTEREST PAYMENTS UNDER THE PROGRAM, THE DEPARTMENT WOULD HAVE NO JUSTIFICATION FOR REQUESTING THAT LENDERS INCLUDE FAMILY INCOME DATA IN THEIR REPORTS.

SINCE THE LENDERS' REPORTS DO NOT CONTAIN THIS DATA, AND GAO'S RIGHT OF INSPECTION IS DEFINED IN TERMS OF RECORDS RELEVANT TO AND NECESSARY FOR ASSURING THE CORRECTNESS OF THE REPORTS SUBMITTED, WE SEE NO BASIS ON WHICH GAO COULD CLAIM A RIGHT OF ACCESS TO ANY FAMILY INCOME DATA IN LENDING INSTITUTION RECORDS.

DIGEST

GAO LACKS RIGHT OF ACCESS TO STUDENT FAMILY INCOME DATA, IF ANY, HELD BY LENDERS PARTICIPATING IN GUARANTEED STUDENT LOAN (GSL) PROGRAM. STATUTE ESTABLISHING GSL PROGRAM DOES NOT AFFORD GAO ACCESS TO LENDER RECORDS. DEPARTMENT OF EDUCATION REGULATIONS IMPLEMENTING GSL PROGRAM GRANT GAO ACCESS TO LENDER RECORDS IN ORDER TO ASSURE CORRECTNESS OF LENDERS' REPORTS TO DEPARTMENT. HOWEVER, SINCE FAMILY INCOME IS NO LONGER PROGRAM ELIGIBILITY FACTOR, LENDERS' REPORTS DO NOT CONTAIN FAMILY INCOME DATA.

FN1 FUNCTIONS OF THE COMISSIONER AND HEW UNDER THE GSL PROGRAM WERE TRANSFERRED TO THE SECRETARY OF EDUCATION. 20 U.S.C. SEC. 3441(A)(1) AND (2)(C) (SUPP. III, 1979).