Recommendation: The Commissioner of FHA should clearly define DASP objectives and develop measurable targets for all program objectives. (Recommendation 3)

Agency: Department of Housing and Urban Development: Federal Housing Administration
Status: Open

Comments: HUD issued Standard Operating Procedures for these sales on October 17, 2019. We will continue to follow up with the agency on how it defines the DASP objectives and its development of measurable targets for the program objectives.

Recommendation: The Commissioner of FHA should use performance data to develop criteria for when to hold DASP sales. (Recommendation 4)

Agency: Department of Housing and Urban Development: Federal Housing Administration
Status: Open

Comments: HUD issued a Standard Operating Procedure for these sales on October 17, 2019. However, HUD has not yet developed criteria for when to hold a DASP sale based on performance criteria.

Recommendation: The Commissioner of FHA should monitor individual purchasers' compliance with FHA's modification requirements and ensure the purchasers submit the data needed to evaluate the sustainability of modifications. (Recommendation 6)

Agency: Department of Housing and Urban Development: Federal Housing Administration
Status: Open

Comments: HUD issued s Standard Operating Procedure for these sales on October 17, 2019. However, HUD has not yet addressed purchasers' compliance with FHA's modification requirements to ensure that purchasers submit the data needed to evaluate the sustainability of modifications. We will continue to follow up on the agency's response to this recommendation.

Recommendation: The Commissioner of FHA should develop a methodology to assess the range of possible outcomes for loans when setting DASP reserve prices. (Recommendation 8)

Agency: Department of Housing and Urban Development: Federal Housing Administration
Status: Open

Comments: HUD issued a Standard Operating Procedure for these sales on October, 17, 2019. The procedures address reserve pricing but we will continue to follow up with the agency on any plans to develop a methodology to assess the range of possible outcomes when setting the reserve prices.

Recommendation: The Secretary of Education should assess and improve, as necessary, the quality of data and methods used to forecast borrower incomes, and revise the forecasting method to account for inflation in estimates.

Agency: Department of Education
Status: Open
Priority recommendation

Comments: The Department of Education agreed to assess and improve its borrower income data, and adjust incomes for inflation. In model documentation prepared in advance of the agency's fiscal year 2017 financial statements, Education acknowledged problems in the estimated borrower income data it used to estimate income-driven repayment (IDR) plan costs, and said it was working to obtain access to actual borrower income data for use in its cost estimates. Education implemented part of this recommendation by adjusting borrower incomes for inflation, which caused a downward re-estimate of IDR plan costs totaling $17.1 billion. GAO will monitor Education's progress in implementing the other part of the recommendation.

Recommendation: The Secretary of Education should complete efforts to incorporate repayment plan switching into the agency's redesigned student loan model, and conduct testing to help ensure that the model produces estimates that reasonably reflect trends in Income-Driven Repayment plan participation.

Agency: Department of Education
Status: Open

Comments: The Department of Education (Education) agreed to incorporate repayment plan switching into its redesigned student loan model, reiterating that efforts to incorporate this capability into a new microsimulation model had begun despite challenges inherent in predicting borrower behavior. However, Education's current student loan model still does not allow for estimating the effects of repayment plan switching. In the interim, Education updated its repayment plan selection assumption to more accurately reflect recent trends in income-driven repayment plan participation. GAO will monitor the progress of Education's efforts to implement the planned model redesign with the capability to incorporate plan switching behavior.

Recommendation: To help address Education's strategic goal of providing superior customer service to borrowers, and to strengthen oversight of the Direct Loan program, the Secretary of Education should develop a minimum standard that specifies core call center operating hours to provide borrowers, including those on the West Coast, with improved access to servicers.

Agency: Department of Education
Status: Open

Comments: The Department of Education agreed with this recommendation and said it planned to establish core hours in the requirements for servicers to help borrowers access live customer service representatives. In May 2018, an Education official told us that the department is redesigning its loan servicing system, and one of the goals of this effort is to ensure a consistent experience for all borrowers. The official said all borrowers will have access to the same call center number and other customer service functions, but the specifics have not yet been decided. As Education completes its loan servicing redesign, it should ensure that borrowers have improved access to customer service representatives to aid them in managing their loans. In February 2020, Education officials said implementation of this recommendation was still in progress. The agency estimates a completion date of October 30, 2021, when the new system is expected to be fully operational.

Recommendation: To help address Education's strategic goal of providing superior customer service to borrowers, and to strengthen oversight of the Direct Loan program, the Secretary of Education should ensure the new unified borrower complaint tracking system includes comprehensive and comparable information on the nature and status of borrower complaints made to both Education and servicers, to allow Education to track trends and better manage the program to effectively meet borrower needs.

Agency: Department of Education
Status: Open

Comments: In May 2018, the Department of Education reported that as part of its redesigned loan servicing system, it plans to develop a single platform that maintains a record of all customer service interactions, including any complaints that borrowers submit. While the details have yet to be determined, the goal is to create a unified process consistent with the intent of this recommendation, according to Education. Education must ensure that it collects comprehensive and comparable information on borrower complaints in order to ensure the program meets borrower needs. In February 2020, Education officials said implementation of this recommendation was still in progress. The agency estimates completion in October 2021, when the new system is expected to be fully operational.

Recommendation: To help address Education's strategic goal of providing superior customer service to borrowers, and to strengthen oversight of the Direct Loan program, the Secretary of Education should evaluate and make needed adjustments to Direct Loan servicer performance metrics and compensation to improve assessment, including using baseline data, and alignment with Federal Student Aid's strategic goals aimed at superior customer service and program integrity, and to ensure that the assignment of new loans to servicers takes program compliance into account.

Agency: Department of Education
Status: Open

Comments: The Department of Education agreed with this recommendation and stated that it would evaluate existing and alternative performance metrics and compensation strategies as part of its process for procuring a new loan servicing solution. In February 2020, an Education official told us that Education's new loan servicing system would eventually address this recommendation. However, the official said the metrics that will be used to evaluate loan servicers have not yet been determined. Unless Education better aligns its servicer performance metrics, borrowers will continue to be at risk of experiencing errors and poor customer service. In October 2019, Education officials said implementation of this recommendation was still in progress, pending completion in October 2021, when the new system is expected to be fully operational.

Recommendation: To strengthen management of the Direct Loan Program and ensure good customer service for borrowers, the Secretary of Education should direct the Office of Federal Student Aid's Chief Operating Officer to review its methods of providing instructions and guidance to servicers, identifying areas to improve clarity and sufficiency, and ensure consistent delivery of instructions and guidance to ensure program integrity and improve service to borrowers. For example, the Department could consider implementing a detailed, common servicing manual for the Direct Loan program.

Agency: Department of Education
Status: Open
Priority recommendation

Comments: The Department of Education agreed with this recommendation and reviewed its process for providing guidance to servicers. It has issued a few clarifications to servicers to help with consistency and reported that it intends to incorporate this recommendation into its acquisition plan for a new loan servicing system. To fully implement this recommendation, the agency needs to demonstrate that the new Direct Loan servicing system will provide clear and consistent instructions and guidance to servicers to ensure program integrity and improve service to borrowers. As of February 2020, Education officials said implementation of this recommendation was still in progress, pending completion in October 2021. At that time, the agency expects the re-design of its student loan financial services environment, which will include additional guidance to servicers, to be fully operational.

Recommendation: To help ensure that Income-Based Repayment, Pay As You Earn, and Public Service Loan Forgiveness serve their intended beneficiaries to the greatest extent possible, the Secretary of Education should take steps to consistently and regularly notify all borrowers who have entered repayment of income-driven repayment plan options, including Income-Based Repayment and Pay As You Earn.

Agency: Department of Education
Status: Open

Comments: The Department of Education generally concurred with our recommendation, stating that it is committed to ensuring that federal student loan borrowers have the information they need to manage their debt, including details regarding income-driven repayment plans and loan forgiveness programs. However, Education stated that it is not clear that providing information on repayment options to all borrowers is the most efficient or effective way to achieve this goal. Beginning in 2015, Education directed its loan servicers to start sending detailed income-driven repayment information, such as projected monthly payment amounts and total amounts paid over the life of the loan under each plan, on a quarterly basis to all borrowers who are in school or in the 6-month grace period after leaving school. Education reported that in 2016 its loan servicers also began sending an email to borrowers in the fifth month of their grace period with information about applying for income-driven repayment plans and Public Service Loan Forgiveness. Education also reported that in December 2016 it began sending emails about the Revised Pay As You Earn plan directly to certain groups of borrowers, including those who expressed interest in income-driven plans during exit counseling, were less than 227 days delinquent, or had Federal Family Education Loans. In August 2018, Education indicated that borrowers are notified about income-driven repayment through information posted on websites; billing statements and forbearance and deferment notices; and during various points of delinquency. We acknowledged these efforts in our 2015 report and discussed their limitations. For example, while Education provides detailed information about income-driven repayment on its website, borrowers must actively seek out this information. In addition, we reviewed recent sample billing statements for each of the Department's loan servicers and found the information on income-driven repayment limited to the names of the specific repayment plans. The statements did not include information about how the plans work or eligibility requirements. Additionally, Education reported that in June 2019 it began sending emails about income-driven repayment plans and Public Service Loan Forgiveness directly to certain groups of borrowers, including those in the Standard repayment plan who were 31 to 270 days delinquent or in a discretionary forbearance. While a positive step, these emails were only sent to select groups of borrowers. We maintain that borrowers need sufficient and timely information to ensure they are aware of and can make informed decisions about repayment options. To fully implement this recommendation, Education should consistently and regularly notify all borrowers who have entered repayment about income-driven repayment options, including borrowers who have not been contacted by Education through its targeted notification efforts.

Recommendation: While creating control systems at the same time that the emergency programs were being designed and implemented posed unique challenges, the recent crisis provided invaluable experience that the Federal Reserve System can apply in the future should the use of these authorities again become warranted. Going forward, to further strengthen policies for selecting vendors, ensuring the transparency and consistency of decision making involving the implementation of any future emergency programs, and managing risks related to these programs, the Chairman of the Federal Reserve Board should direct Federal Reserve Board and Reserve Bank staff to strengthen procedures in place to guide Reserve Banks' efforts to manage emergency program access for higher-risk borrowers by providing more specific guidance on how Reserve Bank staff should exercise discretion and document decisions to restrict or deny program access for depository institutions and primary dealers that would otherwise be eligible for emergency assistance.

Agency: Federal Reserve System: Board of Governors
Status: Open

Comments: We most recently sought information from the Board of Governors of the Federal Reserve System in July 2018 regarding the status of the recommendation but did not receive any new information. Therefore, the recommendation remains open.

Recommendation: While creating control systems at the same time that the emergency programs were being designed and implemented posed unique challenges, the recent crisis provided invaluable experience that the Federal Reserve System can apply in the future should the use of these authorities again become warranted. Going forward, to further strengthen policies for selecting vendors, ensuring the transparency and consistency of decision making involving the implementation of any future emergency programs, and managing risks related to these programs, the Chairman of the Federal Reserve Board should direct Federal Reserve Board and Reserve Bank staff to document a plan for estimating and tracking losses that could occur under more adverse economic conditions within and across all emergency lending activities and for using this information to inform policy decisions, such as decisions to limit risk exposures through program design or restrictions applied to eligible borrowing institutions.

Agency: Federal Reserve System: Board of Governors
Status: Open

Comments: We most recently sought information from the Board of Governors of the Federal Reserve System in July 2018 regarding the status of the recommendation but did not receive any new information. Therefore, the recommendation remains open.

Recommendation: While creating control systems at the same time that the emergency programs were being designed and implemented posed unique challenges, the recent crisis provided invaluable experience that the Federal Reserve System can apply in the future should the use of these authorities again become warranted. Going forward, to further strengthen policies for selecting vendors, ensuring the transparency and consistency of decision making involving the implementation of any future emergency programs, and managing risks related to these programs, the Chairman of the Federal Reserve Board should direct Federal Reserve Board and Reserve Bank staff to document the Federal Reserve Board's guidance to Reserve Banks on types of emergency program decisions and risk events that require approval by or consultation with the Board of Governors, the Federal Open Market Committee, or other designated groups or officials at the Federal Reserve Board.

Agency: Federal Reserve System: Board of Governors
Status: Open

Comments: We most recently sought information from the Board of Governors of the Federal Reserve System in July 2018 regarding the status of the recommendation but did not receive any new information. Therefore, the recommendation remains open.