Stricter Enforcement of Refugees' Transportation Loan Repayments Needed

NSIAD-85-56: Published: Mar 8, 1985. Publicly Released: Mar 8, 1985.

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GAO reviewed the Department of State's transportation loan program, which finances the transportation of refugees from temporary asylums overseas to the United States through a revolving loan fund, administered by the Intergovernmental Committee for Migration (ICM), which is an international organization based in Switzerland.

GAO found that, before leaving their asylum countries, refugees sign interest-free promissory notes to repay their transportation costs. However, GAO found that, from 1951 through 1984, only about 20 percent of the amount loaned to refugees had been repaid. The low repayment rates have required State to replenish the revolving loan accounts with over $30 million for additional appropriations in 1983 and 1984, and State has estimated that it will cost approximately $50 million in 1985. Without significant changes in the repayment rates and annual refugee admissions, similar funding levels will be required to keep the program operational. GAO found that the low collection and repayment rates have resulted from inefficient collection methods used by voluntary agencies and the lack of law enforcement. Although most voluntary agencies are improving their loan collection procedures and systems, they are still experiencing problems with maintaining current billing addresses for refugees due to their continual changes of residence. GAO found that the lack of enforcement has been due to the reluctance on the part of the parties associated with the program to enforce repayment of the debts. ICM has questioned the validity of the notes, and State and the voluntary agencies have been uncertain as to whom the debt is owed. Furthermore, many refugees either refuse to acknowledge their debt obligation or to make any payments. Therefore, GAO found that enforcement may require changes in the language and the administration of the loans.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: State developed a revised promissory note for use worldwide. State believes that the new note is legally binding and provides for ICM to assign defaulted loans to State for collection. State developed criteria for determining which loans in default will be assigned to State. As of November 1987, ICM has assigned 28 notes, valued at $29,678, to State for collection.

    Recommendation: In addition to maintaining ongoing efforts to improve voluntary agency collection efforts, the Secretary of State should: (1) determine whether the current language of the promissory notes legally binds refugees to repay these loans; (2) if the notes are considered legally binding, seek an agreement with ICM to assign its defaulted notes to State for collection; and (3) if the notes are not considered legally binding, revise future notes to ensure their legal effectiveness and allow for them to be assigned to State. In the event that existing and future promissory notes can neither be made binding obligations nor assigned for collection, State should consider changing the nature of its loan program so that the loans are made by State to the refugees.

    Agency Affected: Department of State

  2. Status: Closed - Implemented

    Comments: Refugees are being briefed in orientation classes on their loan obligations prior to their departure for the United States. State and ICM reached an agreement whereby ICM will assign defaulted notes to State for collection, and State continues to work to develop ways for voluntary agencies to obtain correct addresses for refugees who have not repaid their loans.

    Recommendation: The Secretary of State should make sure that all U.S.-bound refugees are thoroughly briefed on their loan obligations and sign their promissory notes, as early as possible, prior to their departure to allow ICM sufficient time to provide the voluntary agencies with the documents needed for collection. In addition, agreements with the voluntary agencies must be changed to ensure that they: (1) establish loan criteria and milestones specifying when uncollected notes are delinquent and in default; and (2) submit to State for further action the names and addresses of those refugees whose loans become delinquent.

    Agency Affected: Department of State


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