Information Technology: Education Needs to Address Student Aid Modernization Weaknesses
Fast Facts
The Department of Education's Next Gen program—started in 2017—aims to modernize the Office of Federal Student Aid's technology and operations to improve the experiences of students, parents, and its partners.
FSA has 4 of 9 modernization projects remaining—all of which have had delays. And 3 of the 4 don't have set implementation dates—limiting FSA's ability to retire 2 older systems. In addition, FSA's total reported spending of $502 million on the program didn't include all costs, such as government labor costs. We also found that the program's cost and schedule estimates are unreliable. Our 14 recommendations address these and other issues.
Highlights
What GAO Found
Education's Office of Federal Student Aid (FSA) initiated the Next Gen program in 2017. Next Gen's purpose was to modernize the systems and processes that students, parents, borrowers, and school partners use to apply for, administer, and/or process federal student aid. As of August 2022, FSA had modified the initial scope of Next Gen from 13 projects to nine projects. Of the nine projects, five are considered complete—a data strategy plan, a systems architecture document, a pilot effort on payments, deployment of a data management platform, and deployment of a loan data system. The four remaining projects had each experienced schedule delays with interim milestones. Further, FSA does not know when three of the four projects would be fully implemented (see table).
Schedule Status for Ongoing Federal Student Aid (FSA) Next Gen Projects, as of June 2022
|
Project name |
Original planned full implementation date |
Current planned full implementation date as of June 2022 |
|
Business Process Operations |
7/26/2022 |
3/31/2024 |
|
Digital and Customer Care |
8/12/2021 |
Not yet determined |
|
Partner Participation and Oversight |
3/1/2022 |
Not yet determined |
|
Unified Servicing and Data Solution (previously called Enhanced Processing Solution and Interim Servicing Solution) |
9/22/2022a |
Not yet determined |
Source: GAO analysis of Next Gen FSA program documentation and data provided by FSA officials. | GAO-23-105333
aThis date represents when FSA planned to implement the Interim Servicing Solution environment.
FSA reported that it has spent a total of $502 million on the Next Gen program, as of June 2022. However, this amount does not include all program costs because FSA has not tracked government-related labor costs. Even with this omission, the amount reported has already exceeded FSA's September 2021 life cycle cost estimate of $415 million.
FSA's schedule and cost shortcomings reflect its lack of alignment with GAO best practices. Specifically, FSA's cost estimation guidance does not fully address these practices. Further, the Next Gen program did not substantially or fully meet best practices for any of the key characteristics of a reliable cost or schedule estimate. Until these weaknesses are addressed, FSA cost and schedule estimates will continue to be unreliable. In turn, this will impair the ability of senior leadership to make informed decisions on the program's future.
Next Gen's school partnership project is intended to, among other things, deliver to schools a central point of access to FSA. In carrying out the project, FSA partially implemented each of the 11 selected best practices on project scope, system development quality, and stakeholder management. For example, although the project relied on performance reports to monitor system development quality, project officials did not verify that contractor deliverables met criteria specified in the contract prior to their acceptance. Until the project fully implements all selected best practices, its efforts are at risk of additional delays, cost increases, and system capabilities that do not meet schools' needs.
Why GAO Did This Study
In fiscal year 2021, the Department of Education's FSA spent about $1.3 billion to process federal student aid totaling about $112 billion. To modernize processing of student aid, Education initiated an effort, referred to as the Next Gen program. One of the most critical and expensive projects within Next Gen is a system development effort focused on strengthening partnerships with participating schools.
The House report accompanying the Departments of Labor, Health and Human Services, and Education, and Related Agencies Appropriations Bill, 2021 included a provision for GAO to examine FSA's efforts to transition to the Next Gen program. This report examines (1) the status of FSA's Next Gen program; (2) the extent to which FSA cost estimation guidance and the Next Gen program's cost and schedule estimates aligned with GAO best practices; and (3) the extent to which FSA implemented best IT practices on scope, system development quality, and stakeholder management for the school partnership project.
GAO reviewed Next Gen program and project planning documentation, and evaluated the Next Gen program's cost and schedule estimates against GAO best practices. GAO also assessed the school partnership project against selected project management best practices.
Recommendations
GAO is making 14 recommendations to Education, including addressing weaknesses in cost, scheduling, and project management practices. FSA, on behalf of Education, generally concurred with the recommendations.
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Office of Federal Student Aid | The Chief Operating Officer of FSA should ensure that, moving forward, the Next Gen program tracks and monitors all of its costs, including government labor costs. (Recommendation 1) |
FSA generally agreed with this recommendation. In August 2025, FSA provided documentation that demonstrated that Next Gen officials were continuing to track contractor-related costs for the Next Gen projects. However, FSA did not provide documentation to demonstrate that Next Gen program officials were tracking government-related labor costs (e.g., government officials' time spent working on the program). In April 2026, FSA officials stated that the Next Gen program office no longer exists and all the projects that were associated with the program have been implemented. The FSA officials also agreed to provide supporting documentation. However, as of May 2026, FSA has not yet provided supporting documentation. As such, we will continue to monitor FSA's efforts to address this recommendation.
|
| Office of Federal Student Aid |
Priority Rec.
The Chief Operating Officer of FSA should update FSA's cost estimation guidance for its acquisition programs to incorporate the best practices called for in GAO Cost Estimating and Assessment Guide. (Recommendation 2) |
FSA agreed with this recommendation. In April 2023, the office reported that the FSA Chief Operating Officer directed the senior leadership team to establish a working group to identify potential improvements to its project management guidance and practices. In April 2026, we met with FSA officials to clarify that this recommendation is not specific to the Next Gen program. Specifically, to fully implement this recommendation, FSA should update its cost estimate guidance for its acquisition programs to include all 12 steps of the cost estimating process identified in the GAO Cost Estimating and Assessment Guide. As of May 2026, FSA has not provided any further updates related to this recommendation. Establishing this revised cost estimating guidance would help FSA develop reliable cost estimates for its acquisition programs. Further, it could position FSA to effectively estimate funding needs for its investments and use more reliable data to make budgetary decisions. We will continue to monitor FSA's efforts to implement this recommendation.
|
| Office of Federal Student Aid | The Chief Operating Officer of FSA should update the cost estimate for the Next Gen program to ensure it accounts for all costs and incorporates the best practices called for in GAO Cost Estimating and Assessment Guide. (Recommendation 3) |
FSA generally agreed with this recommendation, with some further considerations. Specifically, FSA stated that the Chief Operating Officer directed the senior leadership team to establish a working group to identify potential improvements to the office's project management guidance and practices based on the helpful recommendations contained in our report. In April 2026, FSA officials stated that the Next Gen program office no longer exists and all the projects that were associated with the program have been implemented. FSA officials also agreed to provide supporting documentation. However, as of May 2026, FSA has not yet provided supporting documentation. As such, we will continue to monitor FSA's efforts to address this recommendation.
|
| Office of Federal Student Aid | The Chief Operating Officer of FSA should revise the schedule estimate for the Next Gen FSA program to incorporate the best practices called for in GAO Schedule Assessment Guide. (Recommendation 4) |
FSA generally agreed with this recommendation, with some further considerations. Specifically, FSA stated that the Chief Operating Officer directed the senior leadership team to establish a working group to identify potential improvements to the office's project management guidance and practices based on the helpful recommendations contained in our report. In April 2026, FSA officials stated that the Next Gen program office no longer exists and all the projects that were associated with the program have been implemented. FSA officials also agreed to provide supporting documentation. However, as of May 2026, FSA has not yet provided supporting documentation. As such, we will continue to monitor FSA's efforts to address this recommendation.
|
| Office of Federal Student Aid | The Chief Operating Officer of FSA should ensure that the PPO project defines metrics for tracking the baseline requirements and the rationale for using the metrics. (Recommendation 5) |
FSA generally agreed with this recommendation. In August 2025, FSA provided an extract of how the PPO project updated its project management plan to define metrics for tracking the baseline requirements and the rationale for using the metrics. However, FSA did not provide the entire updated project management plan for the PPO project. As such, it is unclear if the metrics for tracking the baseline requirements and the rationale for using the metrics were incorporated into an updated version of PPO's Project Management Plan and approved by FSA leadership overseeing the PPO project. In December 2025, Education officials reported that addressing this recommendation is at a complete standstill due to the reduction in force within Education. We will continue to monitor FSA's efforts to implement this recommendation.
|
| Office of Federal Student Aid | The Chief Operating Officer of FSA should ensure that the PPO project documents how detailed requirements meet the business need for the project. (Recommendation 6) |
FSA generally agreed with this recommendation. In August 2025, FSA provided documentation that demonstrated the PPO project had updated its requirements template to explain how each feature maps to at least one high-level business need/program objective. However, to close this recommendation as implemented, we need to review a completed version of the requirements template to validate that the PPO project documented how each particular feature mapped back to a key outcome for the PPO project. In December 2025, Education officials reported that addressing this recommendation is at a complete standstill due to the reduction in force within Education. We will continue to monitor FSA's efforts to implement this recommendation.
|
| Office of Federal Student Aid | The Chief Operating Officer of FSA should ensure that the PPO project captures work performance data and information to identify scope variances and their causes. (Recommendation 7) |
FSA generally agreed with this recommendation. In August 2025, FSA provided an extract of how the PPO project updated its project management plan to describe metrics that will help identify scope variances. However, FSA did not provide the entire updated project management plan for the PPO project. As such, it is unclear if the metrics for identifying scope variances were incorporated into an updated version of PPO's Project Management Plan and approved by FSA leadership overseeing the PPO project. Additionally, we did not receive documentation that demonstrated the PPO project was collecting and reviewing the results of the quality control metrics to identify scope variances and their causes. In December 2025, Education officials reported that addressing this recommendation is at a complete standstill due to the reduction in force within Education. We will continue to monitor FSA's efforts to implement this recommendation.
|
| Office of Federal Student Aid | The Chief Operating Officer of FSA should ensure that the PPO project identifies success criteria and measurable project objectives. (Recommendation 8) |
FSA generally agreed with this recommendation. In August 2025, FSA provided an Excel spreadsheet that identifies how measurable success criteria maps to the four PPO project objectives. However, the spreadsheet's title included the word "draft" so it is unclear whether the success criteria was reviewed and approved by FSA leadership overseeing the PPO project. In December 2025, Education officials reported that addressing this recommendation is at a complete standstill due to the reduction in force within Education. We will continue to monitor FSA's efforts to implement this recommendation.
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| Office of Federal Student Aid | The Chief Operating Officer of FSA should ensure that the PPO project updates the quality management section of its project management plan, and other related quality management documentation, to account for actual project results. (Recommendation 9) |
FSA generally agreed with this recommendation. In August 2025, FSA provided an extract of how the PPO project updated its project management plan to explain how it will account for actual project results. However, FSA did not provide the entire updated project management plan for the PPO project. As such, it is unclear if the process for how the PPO project will account for actual project results were incorporated into an updated version of PPO's Project Management Plan and approved by FSA leadership overseeing the PPO project. In December 2025, Education officials reported that addressing this recommendation is at a complete standstill due to the reduction in force within Education. We will continue to monitor FSA's efforts to implement this recommendation.
|
| Office of Federal Student Aid | The Chief Operating Officer of FSA should ensure that the PPO project develops executable quality activities that incorporate FSA's quality policies into the project. (Recommendation 10) |
FSA generally agreed with this recommendation. In August 2025, FSA provided an extract of how the PPO project updated its project management plan to describe quality control metrics and activities for the project. However, FSA did not provide the entire updated project management plan for the PPO project. As such, it is unclear if these quality control metrics and activities were incorporated into an updated version of PPO's Project Management Plan and approved by FSA leadership overseeing the PPO project. In December 2025, Education officials reported that addressing this recommendation is at a complete standstill due to the reduction in force within Education. We will continue to monitor FSA's efforts to implement this recommendation.
|
| Office of Federal Student Aid | The Chief Operating Officer of FSA should ensure that the PPO project determines that contractor deliverables meet the terms of the contract prior to acceptance. (Recommendation 11) |
FSA generally agreed with this recommendation. In August 2025, FSA provided documentation explaining its contractor deliverable review and acceptance process. However, we need additional documentation to validate that the PPO project had implemented the process to ensure that contractor deliverables met the terms of the contract prior to acceptance. In December 2025, Education officials reported that addressing this recommendation is at a complete standstill due to the reduction in force within Education. As such, we will continue to monitor FSA's efforts to implement this recommendation.
|
| Office of Federal Student Aid | The Chief Operating Officer of FSA should ensure that the PPO project develops and maintains a stakeholder register that includes identification information or specifics around the level of engagement for each stakeholder. (Recommendation 12) |
FSA generally agreed with this recommendation. In August 2025, FSA provided the revised Next Gen PPO stakeholder register, which was updated in August 2024, and it included identification information and specifics around the level of engagement for each stakeholder. For example, the stakeholder register now includes information related to each stakeholders' organizational position, role on the project, influence on the project, what information should be communicated with them, and the frequency and mode in which they should coordinate with each stakeholder. As a result, the project has improved its ability to ensure that it is properly utilizing and managing its stakeholders involvement.
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| Office of Federal Student Aid | The Chief Operating Officer of FSA should ensure that the PPO project defines specific strategies for engaging with stakeholders and updates its stakeholder engagement plan to reflect new or changed management strategies required to effectively engage stakeholders. (Recommendation 13) |
FSA generally agreed with this recommendation. In August 2025, FSA provided a copy of the PPO project's updated stakeholder engagement plan that describes strategies for engaging with stakeholders in each software development lifecycle phase. However, it is unclear whether this updated version of PPO's stakeholder engagement plan has been approved by FSA leadership overseeing the PPO project. Additionally, the updated plan states that the strategies will be reviewed and updated with each major release. As such, to close this recommendation as implemented, we would also need to review the updated stakeholder engagement plan that was developed and approved for the PPO project's most recent release. In December 2025, Education officials reported that addressing this recommendation is at a complete standstill due to the reduction in force within Education. We will continue to monitor FSA's efforts to implement this recommendation.
|
| Office of Federal Student Aid | The Chief Operating Officer of FSA should ensure that the PPO project monitors work performance information that reflects the actual level of stakeholder support and engagement relative to the desired level during all phases of the project lifecycle. (Recommendation 14) |
FSA generally agreed with this recommendation. In August 2025, FSA provided the PPO project's updated stakeholder engagement plan that describes metrics it could use to monitor stakeholder engagement. However, it was unclear if this updated version of the project's stakeholder management plan had been approved by FSA leadership overseeing the PPO project. Additionally, we did not receive documentation that demonstrated the PPO project was collecting and reviewing the results of these stakeholder engagement-related metrics. In December 2025, Education officials reported that addressing this recommendation is at a complete standstill due to the reduction in force within Education. We will continue to monitor FSA's efforts to implement this recommendation.
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