Department of Education: Gaps in Federal Student Aid Contract Oversight and System Testing Need Immediate Attention
Fast Facts
The Department of Education provides billions of dollars in student aid each year. In 2022, Education began modernizing its financial aid application system by contracting with companies to do the work. The new system launched with a few of the planned functions in 2023, but it had system availability issues and submission errors, among other problems.
Education has since improved the system, but there's more to do. For example, it doesn't have a plan to guide upcoming user testing. Nor has the department followed its own processes for overseeing the contractors' work.
Our recommendations address these issues, and more.
Paper that says "FAFSA: Free Application for Federal Student Aid" on a clipboard, which is on a wooden desk next to a computer keyboard, a stack of $100 bills, a notebook, and a pen.
Highlights
What GAO Found
The Department of Education’s Office of Federal Student Aid (FSA) manages the Free Application for Federal Student Aid (FAFSA), which students and parents submit to determine a student’s eligibility for receiving financial aid. The FAFSA Processing System (FPS)—the system that underpins federal student aid—processes these applications (see figure).
Overview of the Free Application for Federal Student Aid (FAFSA) Process
In September 2024, GAO testified that nine of the 25 contractual requirements that defined FPS were not deployed. Examples of the nine requirements not yet deployed included allowing FSA to (1) make corrections to FAFSA applications and (2) modify eligibility rules and requirements. Education officials had stated that these remaining requirements would be deployed by 2026.
However, as of May 2025, Education was unable to provide the status of the complete system. FSA officials said they could not readily provide the status because they were no longer tracking requirements. This raises questions about FSA ensuring required work under the contract is being performed.
Further doubts about contract oversight surfaced when GAO determined that FSA was not validating contractor performance data. Although FSA had established processes for monitoring contractor performance, it did not fully implement them.
In addition, FSA could not demonstrate that contracting officer’s representatives and project management staff had complied with certification requirements. The agency also did not ensure key acquisition staff had specialized training related to the systems development methodology used to develop FPS.
Testing of IT systems is critically important. Although leading practices highlight the importance of thoroughly testing IT systems prior to deployment, FSA did not fully apply these practices. For example, test cases—used to determine whether an application, system, or system feature is working as intended—lacked information that would allow for traceability to underlying requirements. Contributing to this lack of traceability was the absence of agency guidance on what information to include in a test case. In addition, FSA does not have a plan to guide future FPS user testing efforts. This increases the risk that testing will be incomplete and inconsistently executed. Overall, such testing shortfalls can lead to the discovery of significant system deficiencies when deployment occurs.
Why GAO Did This Study
In December 2023, FSA, the largest provider of student financial aid in the nation, deployed a new system with limited functionality to process student aid applications. However, the system—FPS—had availability issues, recurring errors, and long wait times that affected students’ ability to receive aid. Since then, FSA has continued to work to deploy additional functionality.
Among other things, this report addresses the extent to which FSA conducted selected contract oversight activities and applied leading systems testing practices.
GAO examined how FSA tracked the contractor’s progress in meeting contract requirements and compared FSA actions to established contract oversight processes and agency standards. GAO also identified key contract oversight staff for FPS and compared federal certification and training requirements against relevant documentation for these staff. In addition, GAO compared the actions taken by FSA to leading practices for system testing.
Recommendations
GAO is making seven recommendations to Education, including improving its contract oversight; establishing a process to ensure contracting staff receive proper certifications and training; and developing appropriate testing guidance, ensuring that FPS testing is linked to requirements, and developing and implementing a plan for testing with system users.
FSA disagreed with portions of the report, generally agreed with four recommendations, and did not indicate agreement or disagreement with the remaining three. As discussed in the report, GAO maintains that all its recommendations are warranted.
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Education | The Secretary of Education should direct the Chief Operating Officer of FSA to take steps to improve its contract monitoring process to provide assurance that the contractor performs the work called for in the contract for FPS and develops a clear record of accountability for performance. (Recommendation 1) |
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| Department of Education | The Secretary of Education should direct the Chief Operating Officer of FSA to establish a process to validate the contractor performance reports it receives. (Recommendation 2) |
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| Department of Education | The Secretary of Education should direct the Chief Operating Officer of FSA to establish a process to ensure that assessments of contractor performance are documented in accordance with departmental guidance. (Recommendation 3) |
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| Department of Education | The Secretary of Education should direct the Chief Operating Officer of FSA to take steps to ensure that all personnel performing program and project management activities and functions for the FPS contract obtain the appropriate FAC certifications. (Recommendation 4) |
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| Department of Education | The Secretary of Education should direct the Chief Operating Officer of FSA to take steps to establish a process to ensure that all personnel performing contract oversight roles and responsibilities are provided with training related to the project management framework of the contract they are overseeing prior to contract execution. (Recommendation 5) |
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| Department of Education | The Secretary of Education should direct the Chief Operating Officer of FSA to develop a standard or update its existing standard to include test case criteria for testing the FPS system that align with leading practices. (Recommendation 6) |
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| Department of Education | The Secretary of Education should direct the Chief Operating Officer of FSA to develop a plan for its beta testing efforts for future iterations of FPS. (Recommendation 7) |
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|