August 22, 2005

Control Number ED-OIG/A05F0016

Mr. Tom A. Breyer

Interim Director

Illinois Designated Account Purchase Program

1755 Lake Cook Road

Deerfield, Illinois 60015

Dear Mr. Breyer:

The purpose of this letter is to notify you that we are terminating our
audit of the Illinois Designated Account Purchase Program's (IDAPP's)
compliance with requirements for the Federal Family Education Loan
Program (FFELP). The objective of our audit was to determine if IDAPP
complied with 34 C.F.R. §§ 682.209 and 682.411 for conversion of a FFELP
loan to repayment status and due diligence in the collection of FFELP
loans. Our audit covered the period January 1, 2005, through March 31,
2005. We have terminated our audit because we did not identify any
reportable instances of noncompliance with 34 C.F.R. §§ 682.209 and
682.411.

## [Methodology]{.underline}

To meet our objective, we

1.  Reviewed the OMB Circular A-133 audit report for IDAPP, prepared by
    an independent public accountant for the years ended June 30, 2002
    and 2003, and reviewed the supporting audit documentation for the
    year ended June 30, 2003.

2.  Reviewed written policies and procedures and interviewed IDAPP
    officials to obtain an understanding of the processes IDAPP used to
    provide reasonable assurance of compliance with the FFELP loan
    conversion and collection due diligence requirements and used this
    review to identify data we needed to test compliance with the
    program requirements.

3.  Identified the universe of defaulted FFELP loan claims (340) for
    which IDAPP received reimbursement and IDAPP's guarantee agency,
    Illinois Student Assistance Commission, received reinsurance during
    the period January 1, 2005, to March 31, 2005.

4.  Assessed the reliability of computer-processed data by (1) gaining a
    limited understanding of IDAPP's computer system controls; (2)
    reviewing and relying in part upon a NELNET Corporation SAS 70
    report, prepared by an independent public accountant and entitled

> *Student Loan Servicing System (Nservice) and Loan Generation System
> (Ngenius) Service Auditor's Report on Controls* *Placed in Operation
> and Tests of Operating Effectiveness*, for the period January 1, 2004,
> through November 30, 2004;^1^ (3) reviewing and relying in part upon a
> National Student Clearinghouse audit report prepared by an independent
> public accountant for the year ended June 30, 2004;[^1] and (4)
> testing selected loan data for (a) missing data, (b) the relationship
> of one data element to another, (c) values outside of designated
> ranges, and (d) dates outside of valid timeframes.

5.  Tested a randomly selected probe sample of 30 defaulted FFELP loan
    claims from the universe of 340 claims to determine if IDAPP
    converted the loans to repayment in accordance with 34 C.F.R. §
    682.209 and performed at least the minimum loan collection due
    diligence activities set forth in 34 C.F.R. § 682.411.

6.  Observed IDAPP personnel making and receiving loan collection due
    diligence telephone calls and discussing the loan collection due
    diligence activities.

7.  Discussed staffing levels and workload with IDAPP officials and
    analyzed their responses to determine if staffing was sufficient
    given the size of IDAPP's portfolio.

We conducted our field work between May 23, 2005, and July 15, 2005, at
IDAPP's office in Deerfield, Illinois. We performed our work in
accordance with generally accepted government auditing standards
appropriate to the scope of our audit.

### Administrative Matters

Our review was limited to the work described above and would not
necessarily disclose all material weaknesses in IDAPP's administration
of the FFELP. Accordingly, the contents of this letter should not be
construed as acceptance or approval of IDAPP's administration of the
FFELP. The termination of this audit does not preclude further reviews
of this or similar areas by the Office of Inspector General, nor does it
preclude the U.S. Department of Education from taking further action
concerning any aspect of IDAPP's administration of the FFELP. The work
we performed is not a substitute for any other reviews or audits
required by law, license, or accreditation.

In accordance with the Freedom of Information Act (5 U.S.C. § 552),
reports and other documents issued by the Office of Inspector General
are available to members of the press and general public to the extent
information contained therein is not subject to exemptions in the Act.

We wish to express appreciation for the cooperation and assistance
extended by your staff during the audit. Should you have any further
questions regarding this review, please contact Darryl Meador at (816)
268-0513 or Robert Swedberg at (312) 886-8656. No response to this
letter is required.

Sincerely,

/s/

Richard J. Dowd

Regional Inspector General

for Audit

cc: Matteo Fontana, General Manager for Financial Partners, FSA

> Roberta Russo, Regional Director, Financial Partners -- Northern
> Region, FSA
>
> Yolanda Marshall, Audit Liaison Officer, Financial Partners, FSA

[^1]: We did not review the supporting audit documentation or determine
    the quality of the work performed for this report.