Pell Grant Validation Imposes Some Costs and Does Not Greatly Reduce Award Errors:

New Strategies Are Needed

PEMD-85-10: Published: Sep 27, 1985. Publicly Released: Sep 27, 1985.

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GAO analyzed the Department of Education's efforts to verify data submitted by applicants to the Pell Grant Program through validation and the effects of validation on educational institutions and on student applicants for financial aid.

GAO conducted: (1) in-depth case studies of 12 postsecondary schools representing the diversity of schools that Pell Grant recipients attend; and (2) a random sampling of the financial aid offices of 400 other institutions. GAO also surveyed students at three different types of schools and compared the experiences of validated and nonvalidated students. GAO found that: (1) validation increased from 39 percent of recipients in 1981 to 1982 to 64 percent in 1982 to 1983; (2) schools were generally positive toward validation and willing to see it expanded to other financial aid programs, although they reported increased costs and award delays attributable to validation; (3) validation problems and delays in awards did not appear to have an effect on most students' academic plans, although about 1 percent of them may have had their plans negatively affected; and (4) substantial, continuing problems with student application and institutional errors exist despite validation, with overawards occurring more frequently than underawards. GAO also reviewed Education's most recent studies of Pell Grant error and found that its efforts to reduce error were hindered by: (1) lack of clear purpose and formal goals, with little done to prevent, as well as detect, error; (2) information gaps caused by lack of regular monitoring of error rates at all types of schools; (3) decisions made under time constraints, contributing to misinterpretation of data; (4) fragmentation within the Office of Student Financial Assistance; and (5) isolation from other agencies that deal with award inaccuracies.

Matters for Congressional Consideration

  1. Status: Closed - Not Implemented

    Comments: Congress examined student aid programs thoroughly before reauthorizing them in 1986.

    Matter: Congress may wish to consider the rates of Pell Grant error to determine whether additional guidance to Education would be helpful.

  2. Status: Closed - Not Implemented

    Comments: Neither the House nor Senate addressed the issue of data on Pell Grant or other student aid program error rates in reporting their revised Higher Education Act bills in 1986. Since a reauthorization is not immanent, the matter for consideration should be closed.

    Matter: Congress may wish to consider whether the evaluative information that is now available is sufficient for achieving accountability and accuracy in the administration of the Pell Grant Program.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: New error data in 1987 brought some new attention to the problem, since error rates were still high. The Assistant Secretary for Postsecondary Education wrote GAO in November 1987 about various plans for addressing the error rates in all student aid programs, including search of other agencies' experience and pilot testing some ideas. Education continues to face congressional opposition.

    Recommendation: Education may wish to present proposals for legislative change. However, before taking specific actions, Education needs goals for accuracy, diverse strategies clearly linked to the goals, better data, and internal management structures that will apply leadership to corrective action. A comprehensive effort might include a more active search for relevant experience in other agencies and a greater use of pilot tests of promising practices without having to experiment on the regular system. In addition, a comprehensive effort to define goals and strategies might be made in cooperation with the postsecondary institutions that now carry the responsibility for day-to-day administration of the Pell Grant Program.

    Agency Affected: Department of Education

  2. Status: Closed - Implemented

    Comments: OMB oversight of Pell Grant quality control issues by the budget examiner for higher education has been visible and vigorous.

    Recommendation: The Office of Management and Budget (OMB) should maintain its oversight of the Pell Grant Program. OMB could also promote the sharing of promising internal practices in federal agencies, identify workable and effective approaches for institutions carrying out verification functions for federal programs, and encourage the use of joint or substitutable eligibility in order to reduce the work required for need analyses and eligibility reviews, wherever possible.

    Agency Affected: Executive Office of the President: Office of Management and Budget

  3. Status: Closed - Implemented

    Comments: OMB has continued its emphasis on error prevention and correction in all dealings with the Department on Student Aid Management.

    Recommendation: OMB should maintain its oversight of the program, in future management reviews, to ensure that OMB concerns and the issues raised, including the need for improvements in Pell Grant evaluation information, are considered and acted upon.

    Agency Affected: Executive Office of the President: Office of Management and Budget


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