Student Loan Lenders:

Information on the Activities of the First Independent Trust Company

HRD-90-183FS: Published: Sep 25, 1990. Publicly Released: Sep 25, 1990.

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Pursuant to a congressional request, GAO reviewed the activities of a closed California bank, focusing on: (1) its loan portfolio; (2) money it owed the Department of Education under the Stafford Student Loan Program; and (3) bank audits and reviews conducted by various organizations.

GAO found that: (1) the bank made over $1 billion in loans during the 11 years it was in the Stafford program, most of them to students attending proprietary schools; (2) the bank typically sold the loans to secondary market lenders soon after making them; (3) the bank usually owed Education loan origination fees which it consistently paid late; and (4) Education, the California State Banking Department, and two guaranty agencies conducted various bank audits and reviews which uncovered minor and major deficiencies in its financial operations.

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