Vulnerabilities in the Stafford Student Loan Program

GAO discussed ways to improve the structure and administration of the Department of Education's Stafford Student Loan Program. GAO believes that Education needs to: (1) do a better job of approving and monitoring eligible schools; (2) expedite the development of its new student loan data systems designed to screen out ineligible students before they receive guaranteed loans; (3) provide better incentives for lenders and guaranty agencies to assume responsibility for preventing loan defaults; and (4) require guaranty agencies to maintain adequate reserves and avoid conflicts of interest.