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Highlights

Recent events have increased concerns about the potential for fraud in Education's student loan programs related to loans for U.S. residents attending foreign schools. In 2002, GAO's Office of Special Investigations created a fictitious foreign school that Education subsequently certified as eligible to participate in the student loan program. GAO investigators subsequently successfully obtained approval for student loans totaling $55,000 on behalf of three fictitious students. Over the past decade, Education's Inspector General has investigated many instances of suspected student loan fraud involving individuals applying for loans for purported attendance at foreign schools. The conference report accompanying the 2001 Labor, Health and Human Services, and Education Appropriations Act mandated that GAO examine and report on fraud, waste, and abuse with respect to student loans for Americans attending foreign schools.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Education 1. To help ensure that foreign school officials have the knowledge necessary to properly administer FFELP, the Secretary of Education should develop on-line training resources specifically designed for foreign school officials.
Closed - Implemented
Education has developed an online training program especially designed for foreign school officials. Called "FSA COACH," the online program contains 23 lessons designed specifically for staff at non-U.S. schools who administer Federal Family Education Loan Program (FFELP) loans used by U.S. students at participating foreign schools. While the initial iteration of this program in 2004 was a good first step toward providing the information foreign schools officials need to properly administer the FFELP, it still did not adequately cover certain critical administrative responsibilities of foreign school officials. The most recent version of the training program (FSA Coach for Foreign Schools: 2005-2006) includes additional information that had been previously lacking and helps ensure that the training program, in conjunction with other tools, provides foreign school officials with the knowledge necessary to properly administer the FFELP.
Department of Education 2. To better ensure that Education is adequately overseeing foreign schools participating in FFELP, the Secretary of Education should undertake a risk assessment to determine how best to ensure accountability while considering costs, burden to schools and students, and the desire to maintain student access to a variety of postsecondary educational opportunities. Further, after completing the risk assessment, if Education determines that legislative and/or regulatory changes are justified, the Secretary should seek any necessary legislative authority and/or implement any necessary regulatory changes.
Closed - Implemented
Education conducted a risk assessment to determine how best to ensure accountability of foreign school officials. As a result of the risk assessment, Education developed a list of legislative and regulatory changes needed that would allow the Department to more effectively oversee foreign schools' participation in the FFELP. One of its proposals is included as part of a pending Senate bill and a responsible FSA official believes that it is highly probable that the legislation will pass. The bill, as written, would give the Secretary of Education leeway that the Department feels is necessary to ensure accountability while considering costs, burden to schools and students, and student access to a variety of postsecondary educational opportunities.

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