Student Financial Aid:

Data Not Fully Utilized to Identify Inappropriately Awarded Loans and Grants

HEHS-95-89: Published: Jul 11, 1995. Publicly Released: Jul 12, 1995.

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Cynthia Maher Fagnoni
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Pursuant to a congressional request, GAO reviewed the Department of Education's underlying problems with its student loan and Pell Grant program data, focusing on: (1) whether Education has effectively used student aid data to comply with federal requirements and prevent loan defaults and abuse; and (2) Education's efforts to identify ineligible students and abuse in its loan and grant programs.

GAO found that: (1) although faced with billions of dollars in annual payments for defaulted student loans, the Department of Education has not effectively used available student aid data to comply with federal requirements; (2) between 1982 and 1992, 43,519 ineligible students received 58,105 loans, totalling over $138 million; (3) many students may have received loans exceeding their cost of attendance because Education has not kept sufficient cost information; (4) Education has not fully used financial aid data to identify students who received grants while attending two or more schools concurrently or additional financial aid despite being ineligible for defaulting on previous loans; (5) between 1989 and 1993, over 48,000 students may have received Pell Grant overpayments and over 35,000 students may have improperly received grants while attending two or more schools concurrently; (6) over 101,000 students who became ineligible for additional aid may have received Pell Grants totalling about $200 million; (7) although Education has recently made improvements to its student loan and grant systems to identify student loan ineligibility, it is too early to determine the effectiveness of these new systems; and (8) the system controls in place to prevent students who previously defaulted on loans from obtaining additional aid are not sufficiently aimed at prevention.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: Education has completed numerous corrective actions including: (1) reconciling NSLDS data and guaranty agency records to identify duplicate loans, loans missing from NSLDS, and loans not being updated; (2) improving the data provider process by correcting problems with the use of SSN as a student identifier; and (3) developing a management reporting system to compare NSLDS data to data submitted by guaranty agencies to identify discrepancies and take action to correct them.

    Recommendation: The Secretary of Education should take actions to improve the accuracy and completeness of student financial aid data, such as continuing to screen data entered into the National Student Loan Data System (NSLDS) to ensure that they are in a consistent format, and testing the accuracy and validity of data in NSLDS. Further, the Secretary should analyze student aid data more closely to identify patterns of noncompliance with federal requirements, such as following up on students identified as ineligible in the data matches, and take appropriate corrective actions.

    Agency Affected: Department of Education


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