FEDERAL STUDENT 

LOANS

Actions Needed to 

Improve Oversight of 

Schools’ Default Rates

Report to Congressional Requesters

April 2018

GAO-18-163

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-18-163, a report to 

congressional requesters

April 2018

FEDERAL STUDENT LOANS

Actions Needed to Improve Oversight of 

Schools’ Default Rates 

What GAO Found

According to federal law, schools may lose their ability to participate in federal 

student aid programs if a significant percentage of their borrowers default on 

their student loans within the first 3 years of repayment. To manage these 3-year 

default rates, some schools hired consultants that encouraged borrowers with 

past-due payments to put their loans in forbearance, an option that allows 

borrowers to temporarily postpone payments. While forbearance can help 

borrowers avoid default in the short-term, it increases their costs over time and 

reduces the usefulness of the 3-year default rate as a tool to hold schools 

accountable. At five of the nine selected default management consultants (that 

served about 800 of 1,300 schools), GAO identified examples when forbearance 

was encouraged over other potentially more beneficial options for helping 

borrowers avoid default, such as repayment plans that base monthly payments 

on income. Based on a review of consultants’ communications, GAO found four 

of these consultants provided inaccurate or incomplete information to borrowers 

about their repayment options in some instances. A typical borrower with 

$30,000 in loans who spends the first 3 years of repayment in forbearance would 

pay an additional $6,742 in interest, a 17 percent increase. GAO’s analysis of 

Department of Education (Education) data found that 68 percent of borrowers 

who began repaying their loans in 2013 had loans in forbearance for some 

portion of the first 3 years, including 20 percent that had loans in forbearance for

18 months or more (see figure). Borrowers in long-term forbearance defaulted 

more often in the fourth year of repayment, when schools are not accountable for 

defaults, suggesting it may have delayed—not prevented—default. Statutory 

changes to strengthen schools’ accountability for defaults could help further 

protect borrowers and taxpayers.

Borrowers in Forbearance during the First 3 Years of Repayment, 2009 to 2013 

Education’s ability to oversee the strategies that schools and their consultants

use to manage their default rates is limited. Education’s strategic plan calls for

protecting borrowers from unfair and deceptive practices; however, Education 

states it does not have explicit statutory authority to require that the information 

schools or their consultants provide to borrowers after they leave school 

regarding loan repayment and postponement be accurate and complete. As a 

result, schools and consultants may not always provide accurate and complete 

information to borrowers. Further, Education does not report the number of 

schools sanctioned for high default rates, which limits transparency about the 3-

year default rate’s usefulness for Congress and the public.

View GAO-18-163. For more information, 

contact Melissa Emrey-Arras at 

(617) 788-0534 or emreyarrasm@gao.gov.

Why GAO Did This Study

As of September 2017, $149 billion of 

nearly $1.4 trillion in outstanding 

federal student loan debt was in 

default. GAO was asked to examine 

schools’ strategies to prevent students 

from defaulting and Education’s 

oversight of these efforts. 

This report examines (1) how schools 

work with borrowers to manage default 

rates and how these strategies affect 

borrowers and schools’ accountability 

for defaults; and (2) the extent to which 

Education oversees the strategies 

schools and their default management 

consultants use to manage schools’ 

default rates. GAO analyzed Education 

data on student loans that entered 

repayment from fiscal years 2009–

2013, the most recent data at the time 

of this analysis; reviewed 

documentation from Education and a 

nongeneralizable sample of nine 

default management consultants 

selected based on the number of 

schools served (about 1,300 schools

as of March 2017); reviewed relevant 

federal laws and regulations; and 

interviewed Education officials.

What GAO Recommends

Congress should consider 

strengthening schools’ accountability 

for student loan defaults and requiring

that the information schools and 

consultants provide to borrowers about 

loan repayment and postponement 

options be accurate and complete.

GAO recommends that Education

increase transparency of reporting on 

default rate sanctions. Education 

agreed with our recommendation.
Page i GAO-18-163 Federal Student Loans

Letter 1

Background 4

Some Schools’ Consultants Encourage Borrowers to Postpone 

Loan Payments, Which Can Lower Cohort Default Rates and 

Increase Borrowers’ Loan Costs 14

Actions Needed to Improve Education’s Oversight of Default 

Management Strategies and Public Reporting of CDR 

Sanctions 27

Conclusions 31

Matters for Congressional Consideration 32

Recommendation for Executive Action 32

Agency Comments and Our Evaluation 33

Appendix I Objectives, Scope, and Methodology 38

Appendix II Sector and Program Length of Schools with 

Selected Characteristics 45

Appendix III Number of Schools Subject to Department of Education 

Cohort Default Rate Sanctions, 1991-2017 46

Appendix IV Comments from the U.S. Department of Education 47

Appendix V GAO Contact and Staff Acknowledgments 51

Table

Table 1: Key Characteristics of Direct Loan Payment 

Postponement Options 7

Figures

Figure 1: Example of School Cohort Default Rate Calculation 9

Contents
Page ii GAO-18-163 Federal Student Loans

Figure 2: Cohort Default Rate Trends, Cohort Years 1987–2014 10

Figure 3: Example Process for Schools that Hire Default 

Management Consultants to Contact Student Loan 

Borrowers during the 3-Year Cohort Default Rate Period 15

Figure 4: Postponing Monthly Payments through Forbearance 

Increases Borrowers’ Total Student Loan Costs 19

Figure 5: Example of How Long-term Forbearance Can Reduce 

the Potential for a Borrower to Default within the Cohort 

Default Rate Period 20

Figure 6: Percentage of Borrowers in Forbearance for Varying 

Amounts of Time during the 3-Year Cohort Default Rate 

Period, 2009 to 2013 Cohorts 22

Figure 7: Selected Borrower Outcomes for Schools with Cohort 

Default Rate Decreases of 10 or More Percentage Points 

from the 2009 to 2013 Cohorts 24

Figure 8: Schools Subject to Education Cohort Default Rate 

(CDR) Sanction and Appeals Outcomes, Fiscal Years 

2014–2016 30

Figure 9: Sector and Program Length of Schools with Selected 

Characteristics 45

Figure 10: Number of Schools Subject to Department of Education 

Cohort Default Rate Sanctions, 1991-2017 46
Page iii GAO-18-163 Federal Student Loans

Abbreviations

CDR Cohort Default Rate

Direct Loan program William D. Ford Federal Direct Loan Program 

Education U.S. Department of Education 

NSLDS National Student Loan Data System

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. The published product may be reproduced and distributed in its entirety 

without further permission from GAO. However, because this work may contain 

copyrighted images or other material, permission from the copyright holder may be 

necessary if you wish to reproduce this material separately.
Page 1 GAO-18-163 Federal Student Loans

441 G St. N.W.

Washington, DC 20548

April 26, 2018

The Honorable Rosa DeLauro

Ranking Member

Subcommittee on Labor, Health and Human Services,

Education, and Related Agencies

Committee on Appropriations

House of Representatives

The Honorable Mark Takano

House of Representatives

Over 42 million borrowers held nearly $1.4 trillion in federal student loans 

as of September 2017 through programs authorized under Title IV of the 

Higher Education Act of 1965, as amended.1 Of that amount, loans 

valued at $149 billion, or about 11 percent of the total, were in default, 

posing a financial risk to the federal government and taxpayers. The 

Department of Education (Education) can rescind a school’s eligibility to 

participate in federal student aid programs if a certain percentage of their 

student loan borrowers default on their loans within a certain time period.2

Education calculates a cohort default rate (CDR)—the percentage of 

borrowers who enter repayment in a given fiscal year who then default 

within a 3-year period—for each school to hold them accountable for high 

default rates.3

The CDR, however, may have limitations as an oversight tool. News 

reports indicate that some schools and the consultants they hire to 

provide default management services may use strategies to prevent 

borrowers from defaulting during the CDR period that are not in 

borrowers’ best interests. Specifically, these sources reported that 

schools and their consultants may counsel past-due borrowers to 

postpone their monthly payments by putting their loans in forbearance 

when other repayment options may be more favorable for some 

 1 Pub. L. No. 89-329, 79 Stat. 1219, 1232, codified as amended at 20 U.S.C. §§ 1070-

1099d.

2 Specifically, Education generally penalizes schools if their default rate is 30 percent or 

above for 3 consecutive years or above 40 percent in a single year.

3 For the purpose of calculating cohort default rates, Education identifies defaulted loans 

as those whose payments are 360 days or more past due. 34 C.F.R. § 668.202.

Letter
Page 2 GAO-18-163 Federal Student Loans

borrowers.4 Student loan experts have raised concerns that this strategy 

may harm borrowers and undermine the effectiveness of the CDR to hold 

schools accountable. You asked us to review this issue.

For this report, we examined (1) how schools work with borrowers to 

manage schools’ cohort default rates, and how these strategies affect 

borrowers and schools’ accountability for defaults, and (2) the extent to 

which Education oversees the strategies schools and their default 

management consultants use to manage schools’ cohort default rates 

and informs the public about its efforts to hold schools accountable.

To determine how schools work with borrowers to manage their CDRs, 

we examined the practices of selected companies that schools contract 

with for this purpose. Specifically, we selected a nongeneralizable sample 

of nine default management consultants that served over 1,300 schools.5

These schools accounted for over 1.5 million borrowers in the 2013 CDR 

cohort. We reviewed documentation from these default management 

consultants on the schools they work with and the strategies they use to 

reduce borrower defaults. We interviewed management officials and 

employees responsible for contacting and working with borrowers at four 

of these companies.6 We also analyzed school-level data from 

Education’s National Student Loan Data System (NSLDS), Education’s 

central database for federal student aid information, for the five most 

recent CDR cohorts for which data are available, from cohort years 2009 

to 2013, to analyze trends in loan postponement, repayment, and 

 4 Forbearance is a period during which student loan interest continues to accrue but 

monthly payments are temporarily postponed or reduced.

5 To select these nine consultants, we obtained information from Education on 48 default 

management consultants that self-reported they provided default management services to 

schools as of December 2016. We prioritized selection of consultants with large numbers 

of client schools, those with a specific focus on default management, or those with unique 

default management practices based on our review of their websites. 

6 To select the four consultants for interviews, we prioritized selection of consultants that 

provided default management services to large numbers of client schools or had unique 

default management practices. 
Page 3 GAO-18-163 Federal Student Loans

default.7 For the same CDR periods, we analyzed 3-year repayment rate 

data from Education’s College Scorecard and CDRs from Education’s 

CDR Database.8 We also compared the effect postponement of student 

loans has on the CDR by calculating an alternative metric. We assessed 

the reliability of the data we obtained from Education by reviewing 

documentation and testing the data we used in this report. We 

determined the data to be sufficiently reliable for the purposes of this 

report. We also interviewed representatives from higher education 

associations, the Consumer Financial Protection Bureau, a state attorney 

general’s office, and consumer advocates.9 We reviewed relevant 

provisions in the Higher Education Act of 1965, as amended. In addition, 

we assessed the CDR against government standards for internal control 

for identifying and responding to risks and goals and objectives in the 

Office of Federal Student Aid’s Fiscal Year 2015-2019 Strategic Plan.

To determine the extent to which Education oversees the strategies 

schools and their default management consultants use to manage 

schools’ CDRs and informs the public about its efforts to hold schools 

accountable, we reviewed relevant federal laws and regulations and 

Education’s internal guidance and documentation on calculating, 

assessing, and overseeing CDRs. We interviewed Education officials 

responsible for oversight of student financial aid, including the CDR and 

default prevention. We assessed Education’s oversight activities against 

goals and objectives in the Office of Federal Student Aid’s Fiscal Year 

2015-2019 Strategic Plan, government standards for internal control for 

communicating with stakeholders, and Office of Management and Budget 

 7 CDR cohorts are measured by federal fiscal year. For example, the 2013 CDR cohort 

includes borrowers who entered repayment from October 1, 2012 to September 30, 2013. 

The 2009 CDR cohort was the first cohort for which schools were held accountable for a 

3-year CDR, and the 2013 CDR cohort was the most recent available at the time of our 

analysis. While about 6,000 schools participate in federal student aid programs, some 

may be grouped together for purposes of calculating the CDR, such as schools that have

branch campuses and for-profit schools owned by the same company. Our analysis was 

based on the population of 4,138 schools that had a CDR calculated for 2013. We 

excluded schools whose CDR was calculated using a different formula that Education 

uses for schools with fewer than 30 borrowers entering repayment in a particular cohort.

8 The 3-year repayment rate measures the percentage of a school’s borrowers who are 

not in default on their federal student loans and who paid down at least $1 of the principal

loan amount during the first 3 years of repayment. 

9 The Consumer Financial Protection Bureau was created in 2010 to regulate the offering 

and provision of consumer financial products or services, such as student loans, under 

federal consumer financial laws. Pub. L. No. 111-203, § 1011(a), 124 Stat. 1376, 1964 

(2010). 
Page 4 GAO-18-163 Federal Student Loans

guidelines for disseminating public information. More details on our scope 

and methodology are included in appendix I.

We conducted this performance audit from May 2016 to April 2018, in 

accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

Education administers federal student financial aid programs, including 

the William D. Ford Federal Direct Loan (Direct Loan) program, through 

the Office of Federal Student Aid.10 Education issues several types of 

loans under the Direct Loan program, including subsidized and 

unsubsidized loans. Prospective borrowers apply and are approved for 

loans through Education, which then disburses the loan through the 

borrowers’ school. Upon disbursement of funds, Education assigns each 

loan to a contracted loan servicer responsible for communicating 

information to borrowers while they are in school and when they enter 

repayment. Borrowers receive additional information about their loans 

and related rights and responsibilities through their loan’s promissory 

note, Education’s website, and mandatory entrance and exit counseling 

provided by their school.11 When borrowers enter repayment, generally 6 

 10 Until 2010, many federal student loans were originated by private lenders and servicers 

through the Federal Family Education Loan program. Under the Direct Loan program, the 

federal government directly disburses funds to borrowers. 

11 Schools must generally provide entrance counseling to first-time borrowers before the 

first disbursement of the loan. Schools generally must provide exit counseling before a 

student leaves school. Entrance and exit counseling include information on the 

consequences of default. Exit counseling specifically provides borrowers information 

about available repayment options and debt management strategies. See 20 U.S.C. § 

1092(l) and 34 C.F.R. § 685.304(a) for entrance counseling requirements and 20 U.S.C. § 

1092(b) and 34 C.F.R. § 685.304(b) for exit counseling requirements. 

Background

Direct Loan Program
Page 5 GAO-18-163 Federal Student Loans

months after leaving school, they make payments directly to the assigned 

servicer.12

Education offers a variety of repayment plan options that can help Direct 

Loan borrowers avoid delinquency and default, including Standard, 

Graduated, Extended, and Income-Driven.13 Income-Driven Repayment 

plans can ease repayment by setting loan payment amounts as a 

percentage of a borrower’s income and extending the repayment period 

up to 25 years.14 Unlike Standard, Graduated, and Extended repayment 

plans, Income-Driven Repayment plans offer loan forgiveness at the end 

of the repayment term and monthly payments may be as low as $0 for 

some borrowers.15 Extending the repayment period may also result in 

 12 Borrowers are not required to make loan payments when they are enrolled in school at 

least half-time or during the grace period—usually 6 months after leaving school. For 

subsidized loans, which are only available to undergraduate students, borrowers are 

generally not responsible for paying interest on the loans while in school, during the 6-

month grace period, and during periods of authorized deferment (during which borrowers 

can temporarily suspend repayment, if for example, they pursue additional higher 

education, provide military service, or experience economic hardship). For unsubsidized 

loans, which are available to undergraduate and graduate students, borrowers are 

responsible for all interest charges. The Direct Loan program also offers PLUS loans to 

graduate and professional degree students and parents of dependent undergraduate 

students. Borrowers are responsible for paying the interest that accrues on PLUS loans. 

Direct Consolidation loans allow borrowers to combine multiple existing federal student 

loans into a single loan with one interest rate and one monthly payment. 

13 Under the Standard plan, borrowers generally owe fixed monthly payments over a fixed 

term of 10 years. Borrowers are automatically enrolled in the Standard plan if they do not 

choose another option. Under the Graduated plan, borrowers’ payments are initially lower 

than they would be under the Standard plan, but increase every 2 years, for up to 10 

years. Under the Extended plan, borrowers’ terms are fixed at 25 years or less. Monthly 

payments under this plan may be fixed or graduated, and borrowers must have more than 

$30,000 in loans to qualify.

14 Income-Driven Repayment includes the following plans: Income-Contingent 

Repayment, Pay As You Earn, Revised Pay As You Earn, and Income-Based Repayment 

plans. The repayment period for these plans is generally either 20 or 25 years. 

15 Monthly payments for Income-Driven Repayment plans are generally set as a 

proportion of the borrower’s discretionary income, which is assessed annually and defined 

as adjusted gross income exceeding 100 percent of the federal poverty guideline for the 

Income-Contingent Repayment plan, and 150 percent of the guideline for all other plans. 

Borrowers on Income-Contingent Repayment pay $0 if the monthly payment amount 

calculated is $0, and borrowers on Income-Based Repayment, Pay As You Earn, and 

Revised Pay As You Earn pay $0 if the monthly payment calculated is less than $5. Under 

current tax law any amount forgiven under Income-Driven Repayment plans is subject to 

federal income tax.

Federal Student Loan 

Repayment and 

Postponement Options
Page 6 GAO-18-163 Federal Student Loans

some borrowers paying more interest over the life of the loan than they 

would under 10-year Standard repayment. In addition to making monthly 

payments more manageable and offering the potential for loan 

forgiveness, Income-Driven Repayment plans may also reduce the risk of 

default. For example, in 2015, we reported that borrowers in two such 

plans had substantially lower default rates than borrowers in the Standard 

repayment plan.16

Eligible borrowers may also temporarily postpone loan payments through 

deferment or forbearance. Several different types of deferment are 

currently available to borrowers, each with their own eligibility criteria.17

Under deferment, the interest generally does not accrue on subsidized 

loans, but it continues to accrue on unsubsidized loans. Eligible 

borrowers can also postpone or reduce loan payments through either a 

general or mandatory forbearance; however, interest on the loan 

continues to accrue in each type (see table 1).18 Most borrowers choose 

general forbearance, which, unlike most types of mandatory forbearance 

and deferment, can be issued over the phone with no supporting 

documentation.19 As of September 2017, $69.9 billion in outstanding 

Direct Loans was in general forbearance compared to $6.3 billion in 

mandatory forbearance, according to Education data.

 16 See GAO, Federal Student Loans: Education Could Do More to Help Ensure Borrowers 

Are Aware of Repayment and Forgiveness Options, GAO-15-663 (Washington, D.C.: Aug. 

25, 2015).

17 An in-school deferment, available to eligible borrowers who are pursuing additional 

higher education, is the most commonly used type of deferment.

18 Borrowers typically choose to postpone rather than reduce loan payments, according to 

Education officials. Loan servicers can also apply administrative forbearances under 

certain conditions, such as to cover the transition period while they collect and process 

documentation supporting the borrower’s request for a change in repayment plan. 

Education officials stated that administrative forbearances are only used for short periods 

of time, typically less than 60 days. As of September 2017, $36.3 billion in outstanding 

Direct Loans was in administrative forbearance. 

19 Several different types of mandatory forbearance are available. For example, borrowers 

participating in certain teaching services or serving in certain medical or dental residency 

programs, AmeriCorps, or the National Guard are eligible for mandatory forbearance. 
Page 7 GAO-18-163 Federal Student Loans

Table 1: Key Characteristics of Direct Loan Payment Postponement Options

General Forbearance Mandatory Forbearance Deferment

What are the eligibility 

criteria?a None; eligibility is granted at the discretion of the loan 

servicer, which may base 

eligibility on any reason 

acceptable to the loan 

servicer, such as borrower 

financial difficulties.

Must be granted by the loan 

servicer if the borrower meets the 

eligibility requirements, such as 

serving in certain medical or dental 

residency programs, AmeriCorps, 

or the National Guard. 

Must be granted if the borrower 

meets the eligibility requirements, 

such as enrolled at least half-time 

in school, in certain active duty 

military service, or unemployed. 

How long can borrower 

remain in status?

Borrowers can remain in 

forbearance for up to 12 

months before they have to 

reapply. There are no limits 

on the total amount of time a 

borrower can spend in 

general forbearance as long 

as they do not exceed 36 

consecutive months in 

general forbearance.b

For most mandatory forbearance 

types, eligibility can be renewed as 

long as the borrower continues to 

meet the eligibility requirements.c

For most deferment types, 

eligibility can be renewed as long 

as the borrower continues to meet 

the eligibility requirements.c

Is supporting 

documentation 

required? 

No; borrowers can attest to 

their need over the phone 

with no supporting 

documentation.

Yes; supporting documentation is 

generally required.d Yes; supporting documentation is generally required.d

Does interest continue 

to accrue?

Yes. Generally yes. Sometimes; for example, it does 

not accrue on subsidized loans, but

it continues to accrue on 

unsubsidized loans.

Source: GAO analysis of relevant federal laws, regulations, and Department of Education (Education) guidance. | GAO-18-163

a

Eligibility is assessed once the borrower requests a general forbearance, mandatory forbearance, or 

deferment.

b

If they choose to do so, loan servicers may set a limit below 12 months for the maximum period of 

time they grant for each general forbearance.

c

Eligibility for deferment based on unemployment or economic hardship and eligibility for mandatory 

forbearance based on student loan debt burden is generally capped at 3 years. 

d

The supporting documentation required differs depending on the type of mandatory forbearance or 

deferment. For example, a mandatory forbearance based on burden of student loan debt requires 

submission of income documentation, such as a tax return. Loan servicers may be able to verify 

eligibility through Education’s central database for federal student aid information with no additional 

documentation provided by borrowers for some types of mandatory forbearance and deferment, 

according to Education officials. Additionally, some borrowers who qualify for unemployment 

deferment can attest to their need with no supporting documentation. 
Page 8 GAO-18-163 Federal Student Loans

Education computes CDRs each year for all schools that enroll students 

who receive funds through the Direct Loan program.20 To compute a 

school’s CDR, Education divides the number of student loan borrowers in 

a CDR cohort—those entering repayment in the same fiscal year—who 

have defaulted on their loans in the initial 3 years of repayment by the 

total number of a school’s student loan borrowers in that CDR cohort (see 

fig. 1).21 The CDR does not hold schools accountable for borrowers who 

default after the 3-year period.22 Borrowers in deferment and forbearance 

are considered to be “in repayment” and current on their loans for the 

purpose of calculating a school’s CDR, even though borrowers in these 

loan statuses are not expected to make any monthly payments.

 20 Direct Loans included in the CDR calculation include Subsidized and Unsubsidized 

Stafford Loans. Subsidized and Unsubsidized Stafford Loans disbursed under the Federal 

Family Education Loan Program prior to July 2010 are also included in the CDR 

calculation for schools. The calculation does not include PLUS Loans or loans made 

under the Federal Perkins Loan program, which has its own CDR calculation and 

consequences. Under the Federal Perkins Loan program, no new loans were permitted to 

be made after September 30, 2017.

21 Repayment generally refers to the period in which borrowers are responsible for 

repaying their loan(s). Repayment typically begins after a 6-month grace period after a

student drops below half-time enrollment, graduates, or leaves school. CDRs are based 

on the number of borrowers who enter repayment in a given fiscal year; a borrower with 

multiple loans entering repayment in the same fiscal year from the same school will be 

included in the formula only once. 

22 Education also annually reports lifetime default rates. The Cumulative Lifetime Default 

Rate is the percentage of Stafford, PLUS, Grad PLUS, and consolidation loans that 

entered repayment in the Federal Family Education Loan and Direct Loan programs 

during a particular federal fiscal year and defaulted through the end of the most recent 

fiscal year. The Budget Lifetime Default Rate for a particular cohort reflects the default 

rate and percentage of dollars estimated to go into default over the life of the loans. These 

rates are significantly higher than the 3-year CDR because they cover a longer time 

period. For example, the estimated Budget Lifetime Default Rate for the 2017 cohort of 

Direct Loans ranges from 7.8 percent for Unsubsidized Stafford Loans (graduate) to 26.9 

percent for Unsubsidized Stafford Loans (undergraduate). The lifetime default rates are 

not calculated for schools and are not intended as an accountability metric for schools.

Cohort Default Rate 

Calculation
Page 9 GAO-18-163 Federal Student Loans

Figure 1: Example of School Cohort Default Rate Calculation

Note: For the cohort default rate calculation, a cohort includes borrowers who enter repayment in the 

same fiscal year. For example, the 2014 cohort includes borrowers who enter repayment in fiscal 

year 2014 (October 1, 2013 to September 30, 2014).

For the 2014 CDR cohort, the national 3-year CDR was 11.5 percent, 

meaning 11.5 percent of borrowers who first entered repayment in fiscal 

year 2014 had defaulted on one or more loans by the end of fiscal year 

2016. The national CDR has changed over time, peaking at 22.4 percent 

for the 1990 CDR cohort and declining to a historic low of 4.5 percent for 

the 2003 CDR cohort (see fig. 2). Beginning with the 2009 CDR cohort, 

Education switched from a 2-year measurement to a 3-year measurement 

as required by the Higher Education Opportunity Act.23

 23 See Pub. L. No. 110-315, § 436(e), 122 Stat. 3078, 3256 (2008).
Page 10 GAO-18-163 Federal Student Loans

Figure 2: Cohort Default Rate Trends, Cohort Years 1987–2014

Note: Education issued the first cohort default rates (CDR) for the 1987 cohort. Prior to the 2009 

cohort, Education calculated 2-year CDRs, after which they calculated 3-year CDRs. During the 

transition period, Education calculated estimates of both time periods.

According to Education officials, there are several possible explanations 

for the general decrease in the national CDR from the 1990 cohort to the 

2003 cohort. They include: 1) Education’s efforts to provide schools with 

default prevention training; 2) the loss of eligibility to participate in federal 

student aid programs and subsequent closure of many schools with 

chronically high CDRs in the early 1990s; 3) enactment of legislation in 

1998 that increased the length of time a loan can go unpaid before being 

considered in default, which decreased the likelihood that a borrower 

would default within the CDR period;24 and 4) an increase in borrowers 

 24 For the purpose of calculating CDRs, Education now identifies defaulted loans as those 

whose payments are 360 days or more past due. As a result, borrowers past due on their 

loans for fewer than 360 days can avoid default if they begin making payments or 

postpone loan payments through forbearance or deferment. 
Page 11 GAO-18-163 Federal Student Loans

consolidating their loans while in school, an option that was eliminated in 

2006.25

Schools with high CDRs may lose eligibility to participate in federal 

student aid programs. Specifically, Education generally excludes schools 

from participation in the Direct Loan program if their CDR is above 40 

percent for a single year and from participation in the Direct Loan and 

Federal Pell Grant programs if their CDRs are 30 percent or greater for 3 

consecutive years.26 Schools potentially subject to these sanctions can 

pursue an appeal.27 The CDR is the only borrower outcome measure 

used to determine eligibility for participation in federal student aid 

programs for all schools.

Schools with high CDRs that do not cross these thresholds may also be 

subject to additional oversight. For example, schools are certified for up to 

6 years to maintain eligibility to participate in federal student aid, but 

schools with high CDRs may only be granted certification for 2 years, 

according to Education policy.28 Education policy also prioritizes selection 

of schools with high CDRs for program review.29 Further, schools whose 

CDRs are equal to or exceed 30 percent for any cohort are required to 

create a Default Prevention Taskforce that develops and submits a 

 25 In-school consolidations counted borrowers’ time in school as part of the CDR period. 

As a result, these borrowers were much less likely to default during the CDR period than 

other borrowers because they were eligible for in-school deferments that covered most of 

the CDR period, according to Education officials.

26 Sanctioned schools lose program eligibility for the remainder of the fiscal year in which 

the school is notified of its sanction and for the following 2 fiscal years. Pell Grants are 

awarded to undergraduate students with financial need to help finance their 

postsecondary education. Schools that maintain CDRs below 15 percent for 3 consecutive 

cohorts are rewarded with fewer restrictions regarding their disbursement of federal 

student loans. 

27 There are six types of appeals and one adjustment available to schools subject to 

sanction; we refer to these collectively in this report as appeals.

28 Through its certification process, Education reviews schools to ensure that they are 

administratively and financially capable of providing the education they promise and of 

administering Title IV program grants and loans in compliance with requirements. 

29 Education conducts program reviews to confirm that a school complies with Department 

requirements for institutional eligibility, financial responsibility, and administrative 

capability. The Higher Education Act of 1965, as amended, requires that the Department 

develop a system to prioritize program reviews based on high CDRs and dollars in default, 

among other risk factors. 

Use of the Cohort Default 

Rate to Hold Schools 

Accountable
Page 12 GAO-18-163 Federal Student Loans

default prevention plan to Education to reduce defaults, among other 

things.30

When borrowers do not make payments on their federal student loans, 

and the loans are in default, the federal government and taxpayers are 

left with the costs. Borrowers also face severe financial burdens when 

their federal student loans go into default. For example, upon default the 

entire unpaid balance of the loan and any accrued interest is immediately 

due. The amount owed may increase due to late fees, additional interest, 

and costs associated with the collection process, including court costs, 

collection fees, and attorney’s fees.31 The federal government also has 

tools to collect on defaulted student loans. For example, under the 

Treasury Offset Program, the federal government can withhold certain 

federal or state payments to borrowers, including federal or state income 

tax refunds and some Social Security benefits, to collect on defaulted 

student loans.32 The federal government can generally also garnish up to 

15 percent of a defaulted borrower’s disposable pay and apply those 

funds toward the defaulted loan. There is no limit on how long the 

government can attempt to collect on defaulted student loans, and 

 30 These default prevention plans must identify the factors causing a school’s high default 

rate, establish measurable objectives and the steps the school will take to improve its 

CDR, and specify the actions the school will take to improve student loan repayment. 34 

C.F.R. § 668.217.

31 Defaulted loans will appear on the borrower’s credit record, which may make it more 

difficult for the borrower to obtain other loans and could also harm their ability to obtain a 

job or rent an apartment. Defaulted borrowers may also be ineligible for assistance under 

federal loan programs and may not receive any additional federal student aid until the loan 

is repaid in full or the borrower resolves the default through other means, such as loan 

consolidation or loan rehabilitation. Defaulted borrowers who enter into a loan 

rehabilitation agreement can restore their eligibility for federal student aid after making six 

on-time monthly payments and get their loans out of default after making nine on-time 

monthly payments.

32 The Treasury Offset Program was established under the Debt Collection Improvement 

Act of 1996 to centralize the collection of federal nontax debt, including defaulted federal 

student loans, at the Department of the Treasury. GAO previously reported that in fiscal 

year 2015 Education collected about $4.5 billion on defaulted student loan debt, of which 

about $171 million was collected through Social Security offsets. Supplemental Security 

Income benefits, which provide monthly cash assistance for eligible individuals with limited 

financial means, are exempt from offset. GAO, Social Security Offsets: Improvements to 

Program Design Could Better Assist Older Student Loan Borrowers with Obtaining 

Permitted Relief. GAO-17-45 (Washington, D.C.: Dec. 19, 2016).

Consequences of Student 

Loan Defaults
Page 13 GAO-18-163 Federal Student Loans

student loans are more difficult to eliminate in bankruptcy proceedings 

than other types of consumer debt.33

Some schools hire default management consultants to help them reduce 

their CDRs. Education classifies default management consultants as 

“third-party servicers” and generally has the authority to oversee the 

services they provide to schools and their students.34 Schools are 

required to notify Education when they enter into, modify, or terminate a 

contract with a third-party servicer. Based on concerns that a significant 

number of schools had not reported information on the third-party 

servicers they use as required, Education issued guidance to remind 

schools of the requirement in January 2015.35 In addition, Education 

requires third-party servicers to submit information about the services 

they provide to schools. As of June 2017, Education reported that it had 

information on 187 third-party servicers, including 48 that reported 

providing default management services. Schools must ensure that their 

third-party servicers, including default management consultants, comply 

with relevant federal regulations and program requirements.36 Education 

also requires third-party servicers to submit an annual compliance audit 

report that covers the administration of the federal student aid related 

services they perform to determine compliance with applicable statutes, 

regulations, and policies.

 33 Student loans cannot be eliminated in bankruptcy proceedings unless the court finds

that repayment would constitute an undue hardship on the borrower and the borrower’s 

dependents. 11 U.S.C. § 523(a)(8).

34 Under Education’s regulations at 34 C.F.R. § 668.2, a third-party servicer is an entity or 

individual that enters into a contract with an eligible institution to administer any aspect of 

the institution’s participation in Title IV programs, including, but not limited to determining a 

student’s eligibility for Title IV funds and receiving, disbursing, or delivering Title IV funds 

to students. Not all third-party servicers provide default management services, and those 

that do may offer other services as well. 

35 U.S. Department of Education, Office of Postsecondary Education, Third-Party Servicer 

Institutional Requirements and Responsibilities, GEN-15-01 (Washington, D.C.: Jan. 9, 

2015).

36 Schools may be fined or have their eligibility to participate in federal student aid 

programs suspended or terminated if their consultants violate relevant regulations or 

requirements. 34 C.F.R. §§ 668.84, 668.85, 668.86.

Default Management 

Consultants
Page 14 GAO-18-163 Federal Student Loans

To help manage their default rates, some schools hired default 

management consultants that encouraged borrowers with past-due 

student loans to postpone loan payments through forbearance, even 

when better borrower options may be available.37 The nine default 

management consultants we selected, which served over 1,300 schools, 

used various methods to contact borrowers and attempted to connect 

them with their loan servicer for assistance (see fig. 3). Seven of the nine 

participated in three-way conference calls with the borrower and the loan 

servicer. Further, one consultant visited past-due borrowers at their home 

to provide in-person loan counseling and connect them to their loan 

servicer.

 37 Forbearance helps borrowers avoid default because it brings past-due loans current 

(meaning zero days past due). Loans that are 360 days or more past due are considered 

to be in default for the purpose of calculating CDRs. Schools can also manage their CDRs 

by directly contacting their past-due borrowers to try to prevent them from defaulting on 

their loans without the assistance of a consultant.

Some Schools’

Consultants 

Encourage Borrowers 

to Postpone Loan 

Payments, Which 

Can Lower Cohort 

Default Rates and 

Increase Borrowers’

Loan Costs

Some Schools’

Consultants Encourage 

Borrowers to Postpone 

Loan Payments When 

Better Borrower Options 

May be Available
Page 15 GAO-18-163 Federal Student Loans

Figure 3: Example Process for Schools that Hire Default Management Consultants to Contact Student Loan Borrowers during 

the 3-Year Cohort Default Rate Period

Among the nine consultants, we found some examples when repayment 

and postponement options were presented to borrowers neutrally or 

forbearance was presented as a last resort. However, we also identified 

examples from five of the consultants—which served about 800 

schools—when forbearance was encouraged over other options that may 

have been more beneficial to the borrower, such as Income-Driven 

Repayment plans (see sidebar) or Extended or Graduated repayment 

plans.38 These examples include practices that were still in use at the 

time of our review and those that consultants reported they previously 

used but have since discontinued. We included ongoing and discontinued 

practices in our review to illustrate the types of strategies that consultants 

have used to help schools manage their CDRs since Education began 

holding schools accountable for a 3-year CDR in fiscal year 2009 and to 

provide insight about the potential impact these strategies may have had 

on some borrowers. Of these five consultants: 

 38 These schools accounted for over 875,000 borrowers in the 2013 CDR cohort. 

According to Education officials, not all borrowers are eligible for Income-Driven 

Repayment plans, and in some cases borrowers may find that their monthly payments 

would be lower on the Extended or Graduated repayment plans. Borrowers may also be 

able to lower their monthly payment through loan consolidation. Education provides a 

calculator on its website that allows borrowers to estimate monthly loan payments and 

total loan costs under different repayment plans. 
Page 16 GAO-18-163 Federal Student Loans

• Four consultants sent borrowers who were past due on their loans 

unsolicited emails and letters that included only a forbearance 

application and instructed borrowers to return the application to them 

instead of their loan servicer.39 Representatives of one consultant said 

that this practice was to ensure that borrowers completed the forms 

accurately. According to Education, the application provides an 

opportunity for borrowers to learn about other repayment and 

postponement options and the potential costs of forbearance. The 

application includes a statement informing borrowers about the option 

to request a deferment or Income-Driven Repayment plan and 

examples of the additional costs borrowers may incur as a result of 

interest that continues to accrue during forbearance. While this is 

correct, the application does not include details about these options; 

instead, it directs borrowers to Education’s website for more 

information. Borrowers who only receive a forbearance application 

may inaccurately assume that forbearance is their only or preferred 

option. Moreover, borrowers may miss the opportunity to learn about 

other, potentially more favorable repayment and postponement 

options from Education’s loan servicers, who are responsible for 

counseling borrowers and approving forbearance requests.

• One consultant included an inaccurate statement in letters it sent to 

borrowers who were past due on their loans. This consultant sent 

past-due borrowers forbearance applications with letters that 

inaccurately stated that the federal government can take away 

Supplemental Nutrition Assistance Program and Supplemental 

Security Income benefits when borrowers default on a federal student 

loan.40 Inaccurate information about the consequences of default 

could cause a borrower who depends on these benefits to feel undue 

pressure to choose forbearance, even when eligible for more 

favorable repayment and postponement options.41 Further, this 

 39 In the emails and letters that included a forbearance application, one consultant also 

suggested making a loan payment as an option. One other consultant reported that it 

stopped contacting borrowers on behalf of schools in 2016. 

40 According to officials at the U.S. Department of Agriculture, which administers the 

Supplemental Nutrition Assistance Program—previously known as the Food Stamp 

Program—benefits cannot be reduced due to borrowers defaulting on federal student 

loans. Similarly, according to Social Security Administration officials, Supplemental 

Security Income benefits, which provide cash assistance for eligible low-income 

individuals, cannot be reduced due to borrowers defaulting on federal student loans.

41 Deferment may be a more favorable postponement option for eligible borrowers with 

subsidized loans because the interest generally does not accrue on these loans during 

periods of deferment.

Income-Driven Repayment Plans May Be 

Better Options for Some Struggling 

Borrowers 

According to Education, postponing payments 

through forbearance may be appropriate for 

some borrowers who face temporary 

hardships. On the other hand, Income-Driven 

Repayment plans may be a better option for 

borrowers who are having difficulty repaying 

their loans for an extended period of time. 

These plans base monthly payments on 

income and family size, and payments may be 

as low as $0 for those who qualify. IncomeDriven Repayment plans also feature the 

potential for forgiveness of remaining loan 

balances after 20 or 25 years of repayment. 

Interest generally continues to accrue on 

loans in both forbearance and Income-Driven 

Repayment. Under forbearance, accumulated 

interest that is not paid during the forbearance 

period will generally be added to the loan 

balance, resulting in higher monthly payments 

when forbearance ends. In contrast, the 

federal government does not charge the 

unpaid interest for up to 3 years for some 

borrowers repaying their loans on IncomeDriven Repayment plans, and struggling 

borrowers on these plans are not generally 

expected to make higher monthly payments 

until their financial situation improves.

In addition, GAO’s past work found that 

borrowers in Income-Driven Repayment had 

substantially lower rates of default than those 

in Standard repayment. 

GAO previously found that it is difficult for 

Education to estimate which borrowers have 

incomes low enough to benefit from or be 

eligible for Income-Driven Repayment plans 

because only borrowers who apply for these 

plans are required to submit income 

information to Education. 

Source: GAO analysis of Department of Education 

information, GAO-17-22, and GAO-15-663. | GAO-18-163
Page 17 GAO-18-163 Federal Student Loans

consultant’s script for its representatives to use when calling 

borrowers who are past due on their loans referred exclusively to 

postponing loan payments. The script instructed representatives to tell 

borrowers “I am now going to conference you in with your loan 

servicer and they will process your forbearance over the phone.”

Borrowers who hear such statements may feel undue pressure to 

choose forbearance. The script also instructed representatives to tell 

the loan servicer that the borrower they were about to speak with was 

requesting a forbearance. Further, representatives from this 

consultant were also instructed to tell borrowers to “stick to their guns”

on the option they have selected before connecting the borrower with 

their loan servicer on a three-way call.

• One consultant previously offered borrowers gift cards as an incentive 

to put their loans in forbearance.42 Education has also previously 

identified the use of gift cards to steer borrowers toward forbearance 

over other available options. An internal review that Education 

conducted in 2012 and 2013 found that a chain of schools used gift 

cards to promote forbearance for purposes of lowering its CDR. 

According to Education’s findings, a borrower who had attended one 

of the schools stated that she was current in her payments but was 

offered a $25 gift card to apply for forbearance. Multiple borrowers 

included in Education’s review expressed the view that they were 

pressured or forced to apply for forbearance and were not made 

aware of other options, such as deferment or Income-Driven 

Repayment plans. Indeed, offering gift cards may steer borrowers 

toward forbearance over other available options. While the consultant 

that offered gift cards to borrowers to lower schools’ CDRs has 

discontinued this practice, and the school Education reviewed has 

since closed, these practices may have affected reported CDRs and 

could be used by other consultants and schools.

Schools have a financial interest in preventing borrowers from defaulting 

within the first 3 years of repayment to ensure that their CDRs remain low 

enough to meet Education’s requirements for participating in federal 

student aid programs.43 Consultants also have a financial interest in 

 42 The consultant reported that it stopped offering gift cards in 2013 because its outreach 

was effective without offering them. 

43 Education generally sanctions schools by excluding them from participating in the Direct 

Loan program if their CDR is above 40 percent in a single year and from participating in 

the Direct Loan and Federal Pell Grant programs if their CDRs are 30 percent or greater 

for 3 consecutive years.
Page 18 GAO-18-163 Federal Student Loans

preventing borrowers from defaulting during the 3-year CDR period. Eight 

of the nine consultants we selected did not have any school clients that 

paid them to contact borrowers who were past due on their loans outside 

the 3-year CDR period. In addition, four of the nine selected consultants 

were paid by their client schools based on the number of past-due 

borrowers they brought current on their loans during the CDR period, and 

representatives’ salaries or incentives at two of these consultants were 

calculated based on this as well.44

Some consultants have an incentive to encourage forbearance in 

particular as a strategy to prevent borrowers from defaulting within the 3-

year CDR period in an effort to lower their client schools’ CDRs. This is 

because forbearance applications can be processed more quickly than 

other repayment or postponement options. Loan servicers can grant 

general forbearance based on a request from borrowers over the phone 

because there are no documentation requirements, whereas borrowers 

seeking deferment or an Income-Driven Repayment plan generally must 

submit a written application. According to Education officials, loan 

servicers are required to process Income-Driven Repayment plan 

applications within 15 business days. One consultant sent borrowers a 

letter that stated it could process a verbal forbearance in 5 minutes. The 

president of one school that contracted with a consultant that is paid 

based on the number of borrowers brought current told us that he did not 

care whether the consultant encouraged the use of forbearance as long 

as borrowers did not default within the 3-year CDR period and the 

consultant followed federal regulations. According to Education data, 

nearly 90 percent of the school’s borrowers were in forbearance during 

the 2013 CDR period. Consultant payment structures, as well as the 

difference in processing requirements between forbearance, deferment, 

and Income-Driven Repayment plans may create incentives for 

consultants to encourage forbearance over other repayment and 

postponement options.

 44 One of these consultants made additional revenue from borrowers who relapsed into 

delinquency during the CDR period because the consultant charged schools each time 

past-due borrowers were brought current on their loans. 
Page 19 GAO-18-163 Federal Student Loans

While forbearance can be a useful tool for helping borrowers avoid 

defaulting on their loans in the short term, it increases their costs over 

time and reduces the usefulness of the CDR to hold schools accountable. 

To understand the potential financial impact of forbearance during the first 

3 years of repayment (the CDR period), we calculated the cost for a 

borrower with $30,000 in loan debt over 10 years in the Standard 

repayment plan with varying lengths of time in forbearance (see fig. 4).

Figure 4: Postponing Monthly Payments through Forbearance Increases Borrowers’ Total Student Loan Costs

Note: GAO chose $30,000 for the initial loan amount because it was the average outstanding loan 

balance per Direct Loan recipient as of the first quarter of fiscal year 2017. GAO chose 5.7 percent for 

the interest rate because it was the weighted average actual interest rate paid on fixed-rate loans that 

entered repayment in fiscal year 2013, the most recent year for purposes of calculating the cohort 

default rate at the time of GAO’s analysis, according to school-level data from Education’s National 

Student Loan Data System.

A borrower on the 10-year Standard repayment plan who did not spend 

any time in forbearance would pay $39,427 over the life of the loan. 

Spending all 3 years of the CDR period in forbearance would cost that 

borrower an additional $6,742, a 17 percent increase over spending no 

time in forbearance. One borrower we spoke with who took out $34,700 in 

loans and opted for forbearance accrued about $10,000 in interest in just 

over 3 years, an amount that the borrower said she would be paying off 

“for the rest of my days.” Further, the unpaid interest that accrues while a 

borrower’s loans are in forbearance may result in higher future monthly 

Postponing Loan 

Payments Can Increase 

Borrowers’ Loan Costs 

and Reduce the 

Usefulness of the Cohort 

Default Rate to Hold 

Schools Accountable
Page 20 GAO-18-163 Federal Student Loans

payments when the forbearance period ends. Borrowers who cannot 

make these higher monthly payments may eventually default. If schools’

consultants continue to encourage forbearance over other options that 

may be more beneficial, such as Income-Driven Repayment plans, some 

borrowers will continue to be at risk of incurring additional costs without 

any long-term benefits.

Education officials and student loan experts we spoke with said that 

forbearance is intended to be a short-term option for borrowers facing 

financial difficulties lasting a few months to a year, such as unexpected 

medical expenses. Longer periods of forbearance, while not typically 

advantageous to borrowers, can be an effective strategy for schools to 

manage their CDRs. Specifically, spending 18 months or more—at least 

half of the CDR period—in forbearance reduces the potential for 

borrowers to default within the 3-year period (see fig. 5). This is because 

forbearance keeps borrowers current on their loans, and borrowers would 

not go into default until they had made no payments for an additional 360 

days after the forbearance period ended. Indeed, according to our 

analysis of Education’s data for the 2013 CDR period, only 1.7 percent of 

borrowers who were in forbearance for 18 months or more defaulted 

within the 3-year CDR period, compared to 8.7 percent of borrowers who 

were in forbearance up to 18 months during this period, and 20.3 percent 

of borrowers who were not in forbearance during this period. Borrowers 

who default outside the 3-year CDR period will not negatively affect a 

school’s CDR. In an online presentation, representatives from one 

consultant highlighted that forbearance can be a tool for reducing a 

school’s CDR and stated that borrowers who postponed payments 

defaulted less often during the CDR period than other past-due borrowers 

based on a case study they conducted.

Figure 5: Example of How Long-term Forbearance Can Reduce the Potential for a Borrower to Default within the Cohort 

Default Rate Period

Note: For cohort default rate purposes, Education considers loans to be in default after 360 

consecutive days past due.
Page 21 GAO-18-163 Federal Student Loans

According to our analysis of Education’s data, the percentage of 

borrowers whose loans were in forbearance for 18 months or more during 

the 3-year CDR period increased each year during the 5 cohorts we 

reviewed, doubling from 10 percent in the 2009 CDR cohort to 20 percent 

in the 2013 CDR cohort.45 During the same time period, the percentage of 

borrowers whose loans were in forbearance for any amount of time 

increased from 39 percent to 68 percent (see fig. 6).46 Further, borrowers 

in forbearance for 18 months or more defaulted in the year after the 3-

year CDR period more often than they did during the CDR period. 

Specifically, 9.4 percent of these borrowers in the 2013 CDR period 

defaulted in the year following the CDR period, while only 1.7 percent 

defaulted in the first 3 years of repayment, suggesting that long-term 

forbearance may have delayed, not prevented, default for these 

borrowers. Reducing the number of borrowers in long-term forbearance 

and directing them toward other repayment or postponement options 

could help reduce the number of borrowers that later default and save the 

government money. For example, Education estimates that it will not 

recover a certain percentage of defaulted Direct Loan dollars even if 

 45 Unless otherwise stated, our analysis of Education’s data on student loans includes all 

4,138 schools that had a CDR calculated for 2013. We excluded schools whose CDR was 

calculated using a different formula that Education uses for schools with fewer than 30 

borrowers entering repayment in a particular cohort. In our analysis, the term 

“forbearance” includes all types of forbearance (general, mandatory, and administrative) 

unless otherwise stated.

46 Of the total number of borrowers who were in forbearance for any amount of time 

during the 2013 cohort, 69 percent were in general forbearance, 2 percent were in 

mandatory forbearance, and about 30 percent were only in administrative forbearance.

Borrowers may be in more than one type of forbearance during the 3-year CDR period. 

The data we requested from Education did not include mutually exclusive counts for each 

type of forbearance. According to Education officials, Education does not have information 

on the types of forbearance borrowers received from certain loans originated before July 

2010 through the Federal Family Education Loan Program. As a result, the percentage of 

borrowers in each type of forbearance may be under-reported. Education officials said that 

a number of factors may have contributed to the increase in forbearance during each 3-

year cohort period from 2009 to 2013. For example, more borrowers may have sought to 

postpone monthly payments due to financial hardships associated with the recession of 

2007-2009. In addition, to ensure borrowers remain current on their loans, it is common 

for loan servicers to place borrowers in administrative forbearance while their application 

for an Income-Driven Repayment plan is being processed. Our analysis of Education data 

found that the percentage of borrowers in Income-Driven Repayment increased from 3 

percent in the 2009 CDR cohort to 22 percent in the 2013 CDR cohort. Education officials 

also noted that borrowers were placed in administrative forbearance when Education 

began transferring loans from a single servicer to multiple servicers, beginning in 2009. 

However, administrative forbearances for these reasons should be for 60 days or less, 

according to Education officials, so they would not have contributed to the observed 

increase in borrowers in forbearance for 18 months or longer. 
Page 22 GAO-18-163 Federal Student Loans

repayment resumes. Specifically, for Direct Loans issued in fiscal year 

2018, Education estimates that it will not recover over 20 percent of 

defaulted loans. These unrecovered defaulted loan amounts total an 

estimated $4 billion, according to our analysis of Education’s budget 

data.47 In addition to cost savings to the government, borrowers who 

avoid default would not have to face severe consequences, such as 

damaged credit ratings that may make it difficult to obtain credit, 

employment, or housing.

Figure 6: Percentage of Borrowers in Forbearance for Varying Amounts of Time 

during the 3-Year Cohort Default Rate Period, 2009 to 2013 Cohorts

Note: This analysis was based on the population of 4,138 schools that had a cohort default rate 

(CDR) calculated for 2013. Schools whose CDR was calculated using a different formula that 

Education uses for schools with fewer than 30 borrowers entering repayment in a particular cohort 

were excluded from this analysis. Each type of forbearance is included in the analysis (general, 

mandatory, and administrative).

 47 The estimate accounts for collection costs and uses a net present value basis to 

account for the effect of time on the dollar value of missed payments due to default and 

subsequent default collections. The total estimate of defaulted dollars not recovered does 

not include Direct PLUS or Consolidation loans.
Page 23 GAO-18-163 Federal Student Loans

In addition, the percentage of borrowers who made progress in paying 

down their loans during each CDR cohort—the repayment rate—

decreased from 66 percent for the 2009 cohort to 46 percent for the 2013 

cohort (see sidebar).48

We analyzed these data for a subset of schools with the largest CDR 

decreases from the 2009 to 2013 cohorts and found that as these 

schools’ CDRs improved, other borrower outcomes worsened (see app. II 

for more information about these schools).49 Specifically, for this subset of 

schools, the percentage of borrowers in long-term forbearance doubled, 

and the percentage of borrowers who made progress in paying down their 

loans during the CDR period decreased by half, suggesting that these 

schools may be encouraging forbearance as a default management 

strategy (see fig. 7).50

 48 The repayment rate measures the percentage of a school’s borrowers who are not in 

default and have paid down at least $1 of the principal loan amount 3 years after entering 

repayment. Education publishes this rate, along with the 1-, 5-, and 7-year repayment 

rates, in its College Scorecard data. Education officials noted that the increase in 

borrowers participating in Income-Driven Repayment plans beginning in 2009 may have 

contributed to the decrease in the 3-year repayment rate because some borrowers on 

these plans may have monthly payment requirements that do not cover accrued interest. 

These borrowers will not have paid down at least $1 of the principal loan amount after 3 

years in repayment. 

49 Specifically, we analyzed data for the 364 schools that had CDR decreases of 10 or 

more percentage points from the 2009 to 2013 cohorts. We excluded schools whose CDR 

was calculated using a different formula that Education uses for schools with fewer than 

30 borrowers entering repayment in a particular cohort.

50 The percentage of borrowers whose loans were in forbearance for any amount of time 

during each CDR period at these 364 schools increased from 47 percent (2009 cohort) to 

80 percent (2013 cohort). Further, 11.3 percent of borrowers who attended these schools 

and were in forbearance for 18 months or more during the 2013 CDR period defaulted in 

the year following the CDR period, while only 1.4 percent defaulted in the first 3 years of 

repayment.

Comparing the Repayment Rate with the 

Cohort Default Rate (CDR)

The Department of Education’s (Education) 

repayment rate measures the percentage of a 

school’s borrowers who are not in default on 

their federal loans and have repaid at least $1 

of the principal loan amount during the first 3 

years of repayment. According to Education, 

the repayment rate is less susceptible to 

manipulation than the CDR because schools 

may push borrowers to postpone payments, 

such as through forbearance, until the CDR 

measurement window expires to keep their 

CDRs low. However, a school’s repayment 

rate would only improve if borrowers repay a 

portion of the principal on their loans during 

the first 3 years of repayment. According to 

Education officials, the monthly payments of 

some borrowers on Income-Driven 

Repayment plans may not be high enough to 

pay down any principal during the first 3 years 

of repayment. 

Source: GAO analysis of Department of Education 

information. | GAO-18-163
Page 24 GAO-18-163 Federal Student Loans

Figure 7: Selected Borrower Outcomes for Schools with Cohort Default Rate 

Decreases of 10 or More Percentage Points from the 2009 to 2013 Cohorts

Note: This analysis includes 364 schools that had the largest CDR decreases—10 percentage points 

or more—from the 2009 through 2013 cohorts. Schools whose CDR was calculated using a different 

formula that Education uses for schools with fewer than 30 borrowers entering repayment in a 

particular cohort were excluded from this analysis.

Education has acknowledged that when schools encourage borrowers to 

postpone loan repayment until the 3-year CDR period ends, it can have a 

distorting effect on the CDR. Borrowers who have postponed their 

payments through forbearance or deferment are considered to be “in 

repayment” for the purpose of calculating the CDR, even though they are 

not expected to make any payments on their loans while in these 

statuses. As a result, an increased use of forbearance, particularly longterm forbearance, could result in lower CDRs, and therefore fewer 

schools being sanctioned due to high CDRs.51 In July 1999, we reported 

that the CDR understates the actual number of borrowers who default. 

We suggested that Congress may wish to consider amending the Higher 

Education Act of 1965 to exclude borrowers with loans in deferment or 

 51 Further, because these borrowers are never placed in a subsequent cohort, they are 

never included in calculations of a school’s CDR, even if they default on their loans after 

the forbearance period is over.
Page 25 GAO-18-163 Federal Student Loans

forbearance at the end of the CDR period from schools’ CDR calculation 

and include these borrowers in a future CDR cohort after they have 

resumed making payments on their loans.52 Education’s Office of 

Inspector General made a recommendation to the agency to support 

similar amendments to the law in December 2003.53

For this report, we examined the impact that removing borrowers in longterm forbearance from the CDR calculation would have on schools’

reported CDRs.54 For the 2013 cohort, 35 schools from our population 

had CDRs of 30 percent or higher.55 When we excluded from our 

population borrowers who spent 18 months or more in forbearance and 

did not default within the 2013 CDR period, we found 265 additional 

schools that would potentially have had a CDR of 30 percent or higher 

 52 GAO, Student Loans: Default Rates Need to Be Computed More Appropriately, 

GAO/HEHS-99-135 (Washington, D.C.: July 28, 1999). The report concluded that 

excluding such borrowers from the CDR is appropriate because a borrower with a loan in 

deferment or forbearance is generally not required to make loan payments and therefore 

has no exposure to default during the time the deferment or forbearance is in place. These 

legislative changes have not been made.

53 Education’s Office of Inspector General recommended that Education support 

amending the Higher Education Act of 1965, as amended, to exclude from the CDR 

calculation borrowers who are at low risk of default during the CDR cohort because their 

loans were in forbearance or deferment. The Office of Inspector General also 

recommended that these borrowers who are excluded from the CDR cohort be included in 

a future cohort. U.S. Department of Education Office of Inspector General, Audit to 

Determine if Cohort Default Rates Provide Sufficient Information on Defaults in the Title IV 

Loan Programs, ED-OIG/A03-C0017 (Philadelphia, PA.: Dec. 22, 2003).

54 We did not assess the impact of deferments in this analysis, in part because the 

percentage of borrowers in deferment at any time during the CDR period remained 

stable—between 38 and 40 percent—for all schools for each cohort year from 2009 to 

2013. Also, the percentage of borrowers in long-term deferment (which we defined as 18 

months or more in deferment) decreased from 14 to 9 percent for all schools over this time 

period. 

55 Specifically, 30 schools had a 2013 CDR from 30-40 percent and 5 schools had a CDR 

above 40 percent, putting 35 total schools at risk for sanctions. Our analysis was based on 

the population of 4,138 schools that had a CDR calculated for 2013. We excluded schools 

whose CDR was calculated using a different formula that Education uses for schools with 

fewer than 30 borrowers entering repayment in a particular cohort. 
Page 26 GAO-18-163 Federal Student Loans

(see app. II for more information about these schools).56 Schools with 

CDRs at this level for 3 consecutive years may lose eligibility to offer their 

students Direct Loans and Pell Grants. Further, 21 of the 265 schools 

would potentially have had a CDR greater than 40 percent, making them 

potentially subject to immediately losing eligibility to offer Direct Loans. Of 

the 265 schools that would have potentially been subject to sanctions 

based on our alternative calculation, 261 received a combined $2.7 billion 

in Direct Loans and Pell Grants in academic year 2016-2017.57

The CDR is a key tool for holding schools accountable for borrower 

outcomes and protecting borrowers and the federal government from the 

costs associated with default. The substantial growth in the percentage of 

borrowers spending at least half of the CDR period in forbearance 

reduces the CDR’s usefulness to hold schools accountable. This presents 

risks to the federal government and taxpayers, who are responsible for 

the costs associated with high rates of default, and to borrowers who may 

benefit from other repayment or postponement options. Since the way the 

CDR is calculated is specified in federal law, any changes to its 

calculation would require legislation to be enacted amending the law. 

Strengthening the usefulness of the CDR in holding schools accountable, 

such as by revising the CDR calculation or using other accountability 

measures to complement or replace the CDR, could help further protect 

both borrowers and the billions of dollars of federal student aid funds the 

government distributes each year.

 56 Excluding these borrowers from the CDR calculation had the effect of increasing the 

CDR at 4,057 of 4,138 schools. For the 2013 cohort, the percentage of borrowers in 

forbearance for 18 months or more who did not default during the CDR period at each 

school ranged from 0 percent to 65 percent. It is not possible to determine how many 

additional borrowers would have defaulted during the 3-year CDR period if they were not 

in a long-term forbearance. This analysis does not take into account whether school 

behavior contributed to rates of long-term forbearance or may change as a result of 

changes to the CDR calculation. For example, while forbearance would still be an option 

to help borrowers avoid default, removing borrowers in long-term forbearance from the 

CDR calculation may provide schools with greater incentive to encourage other options 

that may be more beneficial to borrowers, such as Income-Driven Repayment plans.

57 Four of the 265 schools did not receive Direct Loans or Pell Grants in academic year 

2016-2017. In addition, of the 21 schools that would potentially have had a CDR greater 

than 40 percent, making them potentially subject to immediately losing eligibility to offer 

Direct Loans, 19 received a combined $106 million in Direct Loans in academic year 

2016-2017.
Page 27 GAO-18-163 Federal Student Loans

Education’s ability to oversee the strategies that schools and their 

consultants use to manage CDRs is limited because there are no

requirements governing the interactions that schools and their consultants 

have with borrowers once they leave school. Education requires that 

schools provide certain information to borrowers about their student loans 

when they begin and finish school but does not oversee schools’ or their 

consultants’ communications with borrowers after they leave school. 

According to Education, the Higher Education Act does not contain 

explicit provisions that would allow it to impose requirements governing 

communications that schools and their consultants may have with 

borrowers who have left school. 

As noted earlier, we found that some default management consultants, in 

seeking to help schools lower their CDRs, provided borrowers inaccurate 

or incomplete information or offered gift cards to encourage forbearance 

over other repayment or postponement options that may be more 

beneficial to the borrower. According to Education officials, borrowers are 

protected from such practices because loan servicers are required to 

inform borrowers of all available repayment options upon processing a 

forbearance. Education officials also said that performance-based 

contracts provide loan servicers an incentive to keep borrowers in 

repayment.58 However, a Consumer Financial Protection Bureau report 

 58 Education began awarding performance-based contracts to loan servicers in 2009. 

Under performance-based contracts, the contracting agency specifies the outcome or 

result it desires and leaves it to the contractor to decide how best to achieve the desired 

outcome. Loan servicers receive monthly payments from Education for each borrower 

they service, with the amount per borrower based on the borrower’s loan status. For 

example, loan servicers receive $2.85 per month for each borrower in repayment, $1.68 

for each borrower in deferment, and $1.05 for each borrower in forbearance. 

Actions Needed to 

Improve Education’s 

Oversight of Default 

Management 

Strategies and Public 

Reporting of CDR 

Sanctions

Requirements Needed to 

Oversee How Schools and 

their Consultants 

Communicate Loan 

Options to Borrowers in 

Repayment
Page 28 GAO-18-163 Federal Student Loans

found that borrowers may not be informed about the availability of other 

repayment plans and instead may be encouraged by their loan servicers 

to postpone payments through forbearance, which may not be in 

borrowers’ best interests.59 Further, some consultant practices we 

identified, such as instructing borrowers to return the forbearance 

application to the consultant and remaining on three-way calls with the 

loan servicer and the borrower, may undermine the role of the loan 

servicer. Education officials also said that borrowers should be aware of 

their repayment options because schools are required to inform 

borrowers of these options through exit counseling when they leave 

school. However, in 2015 we found gaps in borrowers’ awareness of 

repayment options.60 Education’s Office of Federal Student Aid has a 

strategic goal to help protect borrowers and families from unfair, 

deceptive, or fraudulent practices in the student loan marketplace.61

Without clear requirements regarding the information that schools and 

their consultants provide to borrowers after leaving school, Education 

cannot effectively oversee schools’ default management strategies. 

Further, without such requirements, Education cannot ensure that schools 

and consultants are providing borrowers with the information they need to 

make informed decisions to manage their loan costs and avoid future 

default.

 59 The report recommended that policymakers and stakeholders, including Education, 

work to improve multiple aspects of loan servicing, including ensuring that the information 

student loan servicers provide borrowers is accurate and empowers borrowers to take 

action on their loans. Consumer Financial Protection Bureau, Student Loan Servicing: 

Analysis of Public Input and Recommendations for Reform (Washington, D.C.: September 

2015).

60 For example, we found that some borrowers who could benefit from Income-Driven 

Repayment plans may not be aware of them. We recommended that Education take steps 

to consistently and regularly notify all borrowers who have entered repayment of these 

options. Education generally agreed with our recommendation and has taken steps to 

provide more information on Income-Driven Repayment plans to certain groups of 

borrowers, including those who were in school or in the 6-month grace period after leaving 

school, expressed interest in these plans during exit counseling, were less than 227 days 

delinquent, or had Federal Family Education Loans. GAO acknowledged that these are 

positive steps and will close this recommendation when the Department demonstrates that 

it has taken action to ensure that all borrowers in repayment are consistently informed of 

the availability of these repayment plans. GAO-15-663. 

61 U.S. Department of Education, Federal Student Aid, Federal Student Aid: Strategic 

Plan, Fiscal Years 2015-2019 (Washington, D.C.: November 2016).
Page 29 GAO-18-163 Federal Student Loans

The limited information Education reports annually to the public about 

schools that face sanctions for high CDRs overstates the extent to which 

schools are held accountable for their default rates. Specifically, 

Education does not report the number of schools that successfully 

appealed CDR sanctions or the number of schools ultimately 

sanctioned.62 For example, with the release of the 2013 CDRs in 2016, 

Education publicly reported that 10 schools were subject to sanctions, but 

did not publicly report that 9 schools appealed their sanctions and 8 were 

successful in their appeals and were thereby not sanctioned (see fig. 8).63

 62 If a school is notified that it is subject to sanction, the school may submit an appeal to 

attempt to avoid that sanction. There are six different types of appeals and one adjustment 

available to schools that are subject to sanction. According to Education data, the three 

types of appeals that were successful from 2014 to 2016 were the Economically 

Disadvantaged Appeal, Loan Servicing Appeal, and Uncorrected Data Adjustment. The

Economically Disadvantaged Appeal is granted to schools with a high percentage of lowincome students and is based on low-income student and placement rates (non-degreegranting schools) or on low-income student and completion rates (degree-granting 

schools). The Loan Servicing Appeal removes loans that were improperly serviced from 

the CDR calculation. The Uncorrected Data Adjustment allows schools subject to sanction 

to contest that their official CDR calculation did not reflect revisions to the school’s draft 

CDR agreed to by Education.

63 Education releases each school’s CDR and a list of schools subject to CDR sanctions 

in the fiscal year following the 3-year CDR period. For example, the 2013 CDR was 

released in September 2016. 

Education’s Public 

Reporting of Cohort 

Default Rate Sanctions 

Lacks Transparency
Page 30 GAO-18-163 Federal Student Loans

Figure 8: Schools Subject to Education Cohort Default Rate (CDR) Sanction and 

Appeals Outcomes, Fiscal Years 2014–2016

Note: Fiscal year 2014 was the first year schools were sanctioned based on a 3-year CDR 

calculation, and fiscal year 2016 was the most recent year for which sanction and appeals data were 

available at the time of GAO’s analysis. Schools may be subject to sanction if their CDR is above 40 

percent for one year or if their CDRs are at or above 30 percent for 3 consecutive years. Schools that 

exceeded both thresholds in the same year were only counted once. There are six types of appeals 

and one adjustment available to schools subject to sanction; we refer to these collectively in the figure 

as appeals.

Office of Management and Budget guidelines call for federal agencies to 

ensure and maximize the usefulness of information they disseminate to 

the public.64 Federal internal control standards call for effective 

communication with external stakeholders.65 The number of schools 

subject to sanction has declined over time—from a high of 1,028 schools 

 64 Office of Management and Budget, Guidelines for Ensuring and Maximizing the Quality, 

Objectivity, Utility, and Integrity of Information Disseminated by Federal Agencies 

(Washington, D.C.: Sept. 24, 2001).

65 GAO-14-704G.
Page 31 GAO-18-163 Federal Student Loans

in fiscal year 1994 to 10 schools in fiscal year 2017 (see app. III).66 In 

addition, unpublished sanction data reveal that a small fraction of 

borrowers who defaulted on student loans attended schools that have 

been sanctioned. For example, two schools were ultimately sanctioned in 

2016 and accounted for 67 of the nearly 590,000 borrowers whose 

defaulted loans were included in schools’ 2013 CDRs.67 By reporting only 

the number of schools subject to sanction and not those actually 

sanctioned, Education’s data make it difficult for Congress and the public 

to assess the CDR’s usefulness in holding schools accountable.

Preventing student loan defaults is an important goal, given the serious 

financial risks default poses to borrowers, taxpayers, and the federal 

government. The CDR, which is specified in federal law, is intended to

hold schools accountable when significant numbers of their borrowers 

default on their student loans during the first 3 years of repayment. 

However, the metric in its current form creates incentives for schools that 

may result in unintended consequences for some borrowers. Schools 

have an interest in preventing their students from defaulting during the 

CDR period to ensure that they can continue to participate in federal 

student aid programs, and some schools contract with private consultants 

to work with borrowers who have fallen behind on their loan payments. 

Although some of these consultants have recently changed their 

communications to borrowers, others continue to provide inaccurate or 

incomplete information to encourage past-due borrowers to choose 

forbearance over other repayment options. While postponing payments 

through forbearance may help struggling borrowers avoid default in the 

near term, it increases borrowers’ ultimate repayment costs and does not 

necessarily put borrowers on a path to repaying their loans. Moreover, 

including borrowers who spend 18 months or more in forbearance in the 

CDR calculation reduces the CDR’s ability to hold schools accountable

for high default rates since long periods of forbearance appear to delay—

 66 Education released information on the number of schools (10) subject to sanction for 

2017 in September 2017, but the appeals process had not yet been completed at the time 

of our analysis. Education officials gave several explanations for this decline, including 

that many of the schools subject to sanction in earlier years have lost their eligibility to 

participate in federal student aid programs, and that both the Department and schools 

have worked together to reduce schools’ CDRs.

67 Education releases each school’s CDR and a list of schools subject to CDR sanctions 

in the fiscal year following the 3-year CDR period. For example, information on schools 

subject to sanction based on their 2013 CDRs was released in September 2016. This was 

the most recent appeal and sanction information available at the time of our analysis. 

Conclusions
Page 32 GAO-18-163 Federal Student Loans

not prevent—default for some borrowers. Absent a statutory change, 

schools and their consultants seeking to keep CDRs below allowable 

thresholds will continue to have an incentive to promote forbearance over 

other solutions that could be more beneficial to borrowers and less costly 

to the federal government and its taxpayers.

Education plays an important role in overseeing schools and their default 

management consultants to ensure that they are held accountable and 

student loan borrowers are protected. However, because Education 

asserts that it lacks explicit statutory authority to establish requirements 

regarding the information that schools and consultants provide to 

borrowers after they leave school, Education does not hold them 

accountable for providing accurate and complete information about 

repayment and postponement options. In addition, public information on 

CDR sanctions is important for assessing the usefulness of the CDR to 

hold schools accountable. Yet, Education’s practice of reporting the 

number of schools potentially subject to sanction without reporting the 

number of schools ultimately sanctioned following the appeals process 

limits transparency about the CDR’s usefulness for Congress and the 

public.

We are making the following two matters for congressional consideration: 

Congress should consider strengthening schools’ accountability for 

student loan defaults, for example, by 1) revising the cohort default rate 

(CDR) calculation to account for the effect of borrowers spending long 

periods of time in forbearance during the 3-year CDR period, 2) 

specifying additional accountability measures to complement the CDR, for 

example, a repayment rate, or 3) replacing the CDR with a different 

accountability measure. (Matter 1)

Congress should consider requiring that schools and default management 

consultants that choose to contact borrowers about their federal student 

loan repayment and postponement options after they leave school 

present them with accurate and complete information. (Matter 2)

The Chief Operating Officer of the Office of Federal Student Aid should 

increase the transparency of the data Education publicly reports on 

school sanctions by adding information on the number of schools that are 

annually sanctioned and the frequency and success rate of appeals. 

(Recommendation 1)

Matters for 

Congressional 

Consideration

Recommendation for 

Executive Action
Page 33 GAO-18-163 Federal Student Loans

We provided a draft of this product to the Department of Education for 

review and comment. Education’s comments are reproduced in appendix 

IV. We also provided relevant report sections to the Consumer Financial 

Protection Bureau and the nine default management consultants for 

technical comment. The Consumer Financial Protection Bureau provided 

technical comments, which we incorporated as appropriate. 

Education agreed with our recommendation to increase transparency of 

school sanction data. In its response, Education stated that it makes a 

significant amount of CDR data publicly available on its website. For 

example, Education posts CDRs and underlying data for each school for 

which the rates are calculated and lists schools subject to sanctions as a 

result of their CDRs. Education also stated that beginning with the release 

of fiscal year 2015 CDRs, it would provide additional information on its 

website indicating whether schools subject to sanctions have submitted 

appeals and the disposition of such appeals. As we recommended in our 

draft report, Education should also publicly report the number of schools 

ultimately sanctioned each year. 

Our draft report included a recommendation for Education to seek 

legislation to strengthen schools’ accountability for student loan defaults. 

Education disagreed with this recommendation, asserting that from a 

separation of powers perspective, it has a responsibility to implement, 

and not draft, statutes. Education stated that if GAO believes such 

legislation is needed, it would be best addressed as a matter to 

Congress. We agree that, as an executive agency, Education is 

responsible for implementing laws as enacted. However, it is important to 

note that the President has the “undisputed authority” to recommend 

legislation to the Congress68 and the Office of Management and Budget 

within the Executive Office of the President has outlined procedures for 

 68 Ass’n of Am. Physicians & Surgeons v. Clinton, 997 F.2d 898, 908 (D.C. Cir. 1993) 

(discussing Article II, section 3 of the U.S. Constitution which states that the President 

“shall from time to time [ . . . ] recommend to [the Congress’s] consideration such 

measures as he shall judge necessary and expedient” and describing the 

Recommendation Clause as the source from which all executive branch authority to 

recommend legislation derives). As an example of this authority from an Education-related 

statute, see 20 U.S.C. § 3486, which requires the Secretary to make annual reports to the 

President for transmission to Congress, covering the activities of the Department, and 

requires these reports to include, among other things, recommendations for proposed 

legislation where necessary.

Agency Comments 

and Our Evaluation
Page 34 GAO-18-163 Federal Student Loans

executive branch agencies to submit proposed legislation.69 Indeed, in 

making this recommendation, we intended that Education seek legislation 

through any of the practices used by executive branch agencies in 

communicating with Congress. In a recent example, both the President’s 

Budget Request and Education’s Congressional Budget Justification for 

Fiscal Year 2019 seek a change in the statutory allocation formula for the 

Federal Work-Study program to focus funds on institutions enrolling high 

numbers of Pell Grant recipients.70 Nevertheless, in light of Education’s 

disagreement with our draft recommendation, and the importance of 

strengthening schools’ accountability for student loan defaults, we have 

converted the recommendation into a Matter for Congressional 

Consideration.

Our draft report also included a recommendation for Education to require 

that schools and default management consultants that contact borrowers 

about repayment and postponement options after they leave school 

present accurate and complete information. Education agreed that 

institutions should provide accurate and complete information about all 

repayment options. It also stated that institutions should allow the 

borrower’s stated preference for any given repayment option to guide the 

ultimate direction of the conversation, and that the information provided 

should be free from financial incentive. However, Education asserted that 

it “cannot impose requirements on schools and their consultants without 

further authority.” Education clarified in a follow-up communication that 

the Higher Education Act does not contain “explicit provisions” under 

which it could require schools (and their consultants) to include specific 

content in the information that they choose to provide to borrowers after 

the borrowers leave school, but did not address whether there was any 

other authority under which it could take action in this area. Instead, 

Education noted that it could provide information to schools and their 

consultants on best practices in this area. We continue to believe that 

schools and their consultants should be required to ensure that any 

information they present to borrowers about repayment and 

postponement options after they leave school is accurate and complete. 

As we stated in our draft report, without clear requirements in this area, 

 69 Office of Management and Budget, OMB Circular No. A-19: Legislative Coordination 

and Clearance (Washington, D.C., revised Sept. 20, 1979).

70 Office of Management and Budget, Efficient, Effective, Accountable: An American 

Budget; Appendix, Budget of the U.S. Government, Fiscal Year 2019 (Washington, D.C.); 

Department of Education, Student Financial Assistance: Fiscal Year 2019 Budget Request 

(Washington, D.C.).
Page 35 GAO-18-163 Federal Student Loans

Education cannot ensure that schools and consultants provide borrowers 

with the information they need to make informed decisions to manage 

their loan costs and avoid future default. In light of this, and Education’s 

response to our draft recommendation, we have converted our 

recommendation into a Matter for Congressional Consideration.

In its comments, Education inaccurately asserted that our findings should 

be viewed in light of a limited scope. As stated in the draft report, we 

analyzed trends in forbearance, repayment, and default using national 

data from Education for the five most recent CDR cohorts for a population 

of over 4,000 schools. To determine how schools work with borrowers to 

manage their CDRs, we reviewed the practices of a nongeneralizable 

sample of nine default management consultants that served over 1,300 

schools. These schools accounted for over 1.5 million borrowers in the 

2013 CDR cohort. The five consultants that provided inaccurate or 

incomplete information about forbearance or offered gift cards served 

about 800 schools, which accounted for over 875,000 borrowers in the 

2013 CDR cohort. For each of the consultants, as stated in our draft 

report, we reviewed documentation including training materials, internal 

policies and procedures, and examples of correspondence they send to 

borrowers. Finally, Education inaccurately asserted that we based our 

findings on a small sample of interviews with 11 borrowers and officials 

from 3 schools and 4 consultants. We conducted these interviews to 

better understand borrowers’ loan experiences and the strategies that 

schools and their consultants use to manage the CDR, and the illustrative 

interview examples we include in our report do not form the basis of any 

of our findings or recommendations.

In addition, Education commented that the report did not consider the 

extent to which borrowers enter Income-Driven Repayment plans during 

the 3-year CDR period or the substantial growth in borrowers participating 

in these plans over the past several years. Education suggested that such 

data would be important to consider in determining whether there has 

been an overreliance on forbearance in the past, and if so, whether any 

problems in this area are being remedied by the availability of IncomeDriven Repayment plans. We have incorporated additional information 

regarding the increase in borrowers participating in Income-Driven 

Repayment plans in response. As Education noted in its comments, our 

draft report acknowledged that increased participation in these plans may 

have been a factor in the observed increase in overall rates of 

forbearance since it is common for loan servicers to place borrowers in 

administrative forbearance while processing applications for IncomeDriven Repayment plans. However, as explained in our draft report, since 
Page 36 GAO-18-163 Federal Student Loans

administrative forbearance for this purpose should be for 60 days or less 

it would not explain the twofold increase in the percentage of borrowers in 

forbearance for 18 months or longer from CDR cohort years 2009 to 

2013. 

Education also stated that while our report included an example of the 

additional interest cost incurred by a borrower using forbearance, it did 

not discuss the potential additional interest costs associated with other 

repayment options, such as Income-Driven Repayment plans. Education 

noted that these options could be more costly than forbearance in some 

instances and all options have consequences for borrowers. We 

acknowledged in our draft report that interest continues to accrue on 

loans in Income-Driven Repayment and that the monthly payments of 

some borrowers on these plans may not be high enough to pay down any 

principal during the first 3 years of repayment. However, as stated in our 

draft report, Income-Driven Repayment plans, unlike forbearance, offer 

borrowers the potential for loan forgiveness after 20 or 25 years of 

repayment. We have incorporated additional details about the potential 

costs of these and other repayment plans based on Education’s 

comments. The potential consequences that Education highlighted in its 

comments further illustrate the importance of ensuring that borrowers 

receive accurate and complete information to help them make informed 

decisions to manage their loan costs and avoid default.

In response to our findings regarding communication practices of some 

default management consultants, Education stated that the draft report 

did not acknowledge that the forbearance application that selected 

consultants send to borrowers provides an opportunity for borrowers to 

learn about other repayment options and the potential costs of 

forbearance. We have incorporated additional information regarding the 

information included on the application. Although the form mentions 

deferment and Income-Driven Repayment, it does not describe these 

options; instead, it directs borrowers to Education’s website for more 

information. Therefore, we maintain that borrowers who only receive a 

forbearance application may inaccurately assume that forbearance is the 

only or preferred option. 

Further, Education commented that the draft report did not examine what 

effect, if any, consultants may have had in encouraging borrowers to seek 

consecutive forbearances since borrowers can remain in forbearance for 

no longer than 12 months before they have to reapply. Education also 

suggested that comparing the use of forbearance at schools that hired 

consultants that encouraged borrowers to postpone payments with those 
Page 37 GAO-18-163 Federal Student Loans

that did not would have provided a better understanding of the potential 

impact of such practices. While these topics were beyond the scope of 

our objectives for this report, Education may wish to explore them in 

support of its goals to protect borrowers and mitigate risks in the federal 

student aid programs.

We are sending copies of this report to the appropriate congressional 

committees, the Secretary of the Department of Education, the Director of 

the Consumer Financial Protection Bureau, and other interested parties. 

In addition, the report will be available at no charge on GAO’s website at 

http://www.gao.gov.

If you or your staff have any questions about this report, please contact 

me at (617) 788-0534 or emreyarrasm@gao.gov. Contact points for our 

Offices of Congressional Relations and Public Affairs may be found on 

the last page of this report. GAO staff who made key contributions to this 

report are listed in appendix V.

Melissa Emrey-Arras, Director

Education, Workforce, and Income Security Issues
Appendix I: Objectives, Scope, and 

Methodology

Page 38 GAO-18-163 Federal Student Loans

This appendix discusses in detail our methodology for addressing (1) how 

schools work with borrowers to manage schools’ cohort default rates 

(CDR), and how these strategies affect borrowers and schools’

accountability for defaults; and (2) the extent to which the Department of 

Education (Education) oversees the strategies schools and their default 

management consultants use to manage schools’ CDRs and informs the 

public about its efforts to hold schools accountable.

We conducted this performance audit from May 2016 to April 2018, in 

accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

To determine how schools work with borrowers to manage their cohort 

default rates, we examined the practices of companies that schools 

contract with to help them lower their CDRs. Specifically, we selected a 

nongeneralizable sample of 9 of the 48 default management consultants 

on file with Education as of December 2016. To select the 9 consultants, 

we obtained lists of client schools from Education and reviewed websites 

for each of the 48 consultants to determine the services each company 

offered. Some companies offered an array of services to schools, while 

others focused exclusively on default management. We selected our 

nongeneralizable sample of 9 consultants by prioritizing those with large 

numbers of client schools, those with a specific focus on default 

management, or those with unique default management practices based 

on our review of their websites. These 9 companies served over 1,300 

schools.1 These schools accounted for over 1.5 million borrowers in the 

2013 CDR cohort.

We reviewed documentation from the 9 consultants on the strategies they 

use to reduce borrower defaults during the CDR period; their 

organizational structure; products and services offered; current client 

schools; internal training materials; contracts and agreements with 

 1 For 8 of the consultants, we counted schools as clients if they hired the consultant to 

contact federal student loan borrowers on their behalf in 2017. The count for one 

consultant was based on the number of schools that it contracted with for this service in 

2016 since it reported that it stopped contacting borrowers on behalf of schools in 2016.

Appendix I: Objectives, Scope, and 

Methodology

Default Management 

Consultants – Interviews 

and Document Requests
Appendix I: Objectives, Scope, and 

Methodology

Page 39 GAO-18-163 Federal Student Loans

schools; methods of compensation for employees responsible for 

outreach to student loan borrowers; internal policies and procedures; and 

examples of correspondence (e.g., emails, letters, and repayment 

applications) with borrowers. Based on the information received from 

these consultants, we cannot determine how many borrowers were 

contacted or received correspondence from these companies. However, 

the consultants we spoke to generally indicated that the materials they 

provided to us were used for all or most of their school clients.

To learn more about the strategies schools and default management 

consultants use to help schools manage their CDRs, we conducted 

interviews with managers at 4 of the 9 consultants. We also interviewed 

employees responsible for working with student loan borrowers to discuss 

the procedures they use to contact or counsel borrowers on loan 

repayment options. We selected these 4 consultants by prioritizing those 

that provided default management services to large numbers of client 

schools, or had unique default management practices based on website 

reviews.

To determine how schools work with borrowers to manage schools’ CDRs 

we selected a nongeneralizable sample of 12 schools for review based on 

data from Education that suggested that they had successfully lowered 

their CDRs from the 2009 through 2013 cohorts through forbearance. 

This sample informed our selection of borrowers. We emailed borrowers 

who attended these 12 schools and requested interviews with them, and 

selected 3 of the 12 schools for interviews with school officials and 

document requests.

To select the 12 schools, we analyzed CDRs for the 2009-2013 cohorts 

from Education’s Cohort Default Rate Database; 3-year forbearance rates 

for fiscal years 2009-2012 from Education’s Annual Risk Assessment 

data; and 3-year repayment rates for fiscal years 2009-2014 from 

Education’s College Scorecard data.2 We selected the 12 schools from 

the population that had a CDR calculated for 2013. We excluded schools 

whose 2013 CDR was calculated using a different formula that Education 

uses for schools with fewer than 30 borrowers entering repayment in a 

 2 The Cohort Default Rate Database, Annual Risk Assessment data, and College 

Scorecard all contain nationally-comparable data on higher education institutions. 

Schools and Borrowers –

Interviews and Document 

Requests
Appendix I: Objectives, Scope, and 

Methodology

Page 40 GAO-18-163 Federal Student Loans

particular cohort.3 To be considered for selection, schools had to have 

had CDRs of 25 percent or above for cohort years 2009-2013 and also be 

in the following: 1) top 20 percent of year-to-year decreases in CDR; 2) 

top 20 percent of year-to-year increases in 3-year forbearance rates; or 3) 

top 20 percent of 3-year forbearances that resulted in default after the 3-

year CDR period ended. This analysis resulted in a list of 312 schools, 

which we randomized within strata based on combinations of institutional 

control (public, nonprofit, and for-profit), maximum length of degree 

programs offered (less than 4-year or 4-year and above), and school size 

(fewer than 1,000 borrowers entering repayment in a given fiscal year and 

1,000 or more borrowers entering repayment in a given fiscal year).

4 We 

removed schools that had fewer than 1,000 borrowers entering 

repayment in a given fiscal year to mitigate the wide variations in 

forbearance rates and CDRs that may occur at smaller schools. Finally, 

we judgmentally selected a total of 12 schools from across the remaining 

strata, choosing the schools from each stratum in the randomized order. 

We conducted interviews with officials at 3 of these schools (public,

nonprofit, and for-profit) and reviewed documentation on the strategies 

they use to reduce borrower defaults during the CDR period.

To examine how default management strategies may affect borrowers, 

we obtained record-level data from Education’s National Student Loan 

Data System (NSLDS) related to the 12 schools we focused on in our 

review, including data on all loans that entered repayment from fiscal 

years 2011-2014 and contact information for the borrowers that took out 

these loans.5 We weighted the sample toward borrowers whose loans 

were in deferment, forbearance, or were consolidated during the CDR 

period or defaulted after the CDR period.6 We then randomly selected 

about 6,500 of these borrowers and emailed them a request to discuss 

their student loan repayment experience with us. We received replies 

 3 If a school has fewer than 30 borrowers entering repayment in a fiscal year, Education 

combines data from the 3 most recent cohorts to calculate an average CDR. 

4 Randomizing the selection of schools reduced the risk of a biased selection from the 

subpopulation that met our criteria. However, the randomization does not imply that the 

sample will produce estimates that are generalizable to any specific population, because 

the design did not use probability sampling methods.

5 NSLDS is Education’s central database for federal student aid information.

6 Although Consolidation Loans are not directly included in the cohort default rate 

calculation, a defaulted consolidation loan may cause a borrower to be included in the 

numerator of the cohort default rate calculation. This occurs if the consolidation loan 

defaults within the cohort default period that is applicable to the underlying loan(s). 
Appendix I: Objectives, Scope, and 

Methodology

Page 41 GAO-18-163 Federal Student Loans

from 49 borrowers and interviewed 11 of them that we thought may have 

been contacted by their school or a default management consultant. We 

generally selected borrowers for interviews in the order they replied to us. 

We also prioritized borrowers whose email responses included student 

loan experiences that were relevant to our objectives, such as receiving 

communication from their school about student loan repayment and 

postponement options. We were not able to interview borrowers who did 

not provide phone numbers or who provided phone numbers but did not 

respond to our calls.

To determine how schools’ default management strategies affect 

borrowers and the CDR, we analyzed school-level data from Education 

on borrowers with loans that were included in schools’ official CDR 

calculations for the 2009 through 2013 cohorts.7 We selected the 2009 

cohort because it was the first cohort held accountable for the 3-year 

CDR.8 The 2013 cohort was the most recent CDR available at the time of 

our analysis. We identified the year borrowers entered repayment using 

the same logic that Education does for calculating the CDR.9 A borrower 

with multiple loans from the same school whose loans enter repayment 

during the same cohort fiscal year was included in the formula only once 

for that cohort fiscal year.10 We excluded schools whose CDR was 

 7 Specifically, we analyzed data from a custom NSLDS dataset provided by Education, 

Education’s public Cohort Default Rate Database, 3-year repayment rates from the 

College Scorecard, and Direct Loan and Pell Grant disbursements from the public Federal 

Student Aid Data Center, matching the datasets together using schools’ unique 6-digit ID 

numbers.

8 Prior cohorts were subject to a 2-year CDR. As required by the Higher Education 

Opportunity Act, starting with fiscal year 2009, schools are subject to a 3-year CDR.

9 Education’s CDR calculation does not include PLUS Loans and loans made under the 

Federal Perkins Loan Program, which has its own default rate calculations and 

consequences. Direct Loans included in the CDR calculation include Subsidized and 

Unsubsidized Stafford Loans. Subsidized and Unsubsidized Stafford Loans disbursed 

under the Federal Family Education Loan Program prior to July 2010 are also included in 

the CDR calculation for schools. 

10 For CDR calculation purposes, if the borrower rehabilitates a defaulted loan before the 

end of the 3-year CDR period, the borrower is no longer considered to be in default. 

Rehabilitation is a method by which a borrower may resolve the status of defaulted loans 

by making 9 payments, each within 20 days of the due date, during a period of 10 

consecutive months. Few loans are rehabilitated within the 3-year CDR period because it 

takes a minimum of 22 months to default and then rehabilitate a loan (12 months to 

default and another 10 months of payments).

Data Analysis
Appendix I: Objectives, Scope, and 

Methodology

Page 42 GAO-18-163 Federal Student Loans

calculated using a different formula that Education uses for schools with 

fewer than 30 borrowers entering repayment in a particular cohort.

For the population of 4,138 schools that had a CDR calculated for 201311

and a subset of 364 schools that had CDR decreases of 10 or more 

percentage points from the 2009 to 2013 cohorts, we analyzed

• cohort default rates (cohorts 2009-2013);

• the percentage of borrowers who were in forbearance for any length 

of time during their first 3 years in repayment (cohorts 2009-2013);12

• the percentage of borrowers who were in forbearance for 18 or more 

months during their first 3 years in repayment (cohorts 2009-2013);

• the percentage of borrowers who paid down at least $1 of the 

principal loan amount during the first 3 years of repayment (cohorts 

2009-2013); and

• the percentage of borrowers who were in forbearance for varying 

lengths of time during their first 3 years in repayment and then 

defaulted in the year following the CDR period (2013 cohort).

We also calculated an alternative CDR for each of these 4,138 schools, in 

which we excluded borrowers who spent 18 or more months in 

forbearance during the 2013 cohort and did not default during the CDR 

period from their school’s CDR calculation.13 We analyzed how many 

schools would have potentially exceeded the 30 percent and 40 percent 

CDR thresholds for the 2013 cohort and calculated the total amount of 

Direct Loans and Pell Grants that these schools received in academic 

year 2016-2017. We did not estimate the number of schools that could 

become ineligible to participate in federal loan programs under this 

alternative methodology because such schools would be entitled to an 

 11 While about 6,000 schools participate in federal student aid programs, they can be 

grouped together for purposes of calculating the CDR; for instance, a network of 

community colleges or for-profit schools owned by the same company.

12 Each type of forbearance is included in these analyses: general, mandatory, and 

administrative. Education tracks in NSLDS the type of forbearance for Direct Loans and 

Federal Family Education loans owned by the Department, but does not track forbearance 

type for commercially-owned Federal Family Education Loans, according to agency 

officials. As a result, when we report percentages by forbearance type, each may be 

under-reported. 

13 Schools’ CDRs were calculated from a custom NSLDS dataset provided by Education.
Appendix I: Objectives, Scope, and 

Methodology

Page 43 GAO-18-163 Federal Student Loans

appeal and sanctionable thresholds may change with the advent of new 

methodologies of calculating the CDR. Further, schools may change their 

default management strategies in response to an alternative CDR. In 

addition, we assessed the CDR against government standards for internal 

control for identifying and responding to risks and goals and objectives in 

the Office of Federal Student Aid’s Fiscal Year 2015-2019 Strategic Plan.

Additionally, we analyzed data from Education’s Integrated 

Postsecondary Education Data System on sector and program length for 

these 4,138 schools, as well as for certain subsets of these schools (for 

more information, see app. II).

To assess the reliability of the data elements we analyzed for our study, 

we (1) performed electronic testing of required data elements; (2) 

reviewed existing information about the data and the systems that 

produced them; and (3) interviewed agency officials knowledgeable about 

the data. We determined that the data were sufficiently reliable for the 

purposes of this report.

To determine the extent to which Education oversees the strategies 

schools and their default management consultants use to manage 

schools’ CDRs and informs the public about its efforts to hold schools 

accountable, we reviewed relevant federal laws, regulations, guidance, 

and internal documentation from Education on how it oversees schools 

and default management consultants practices as they relate to the CDR 

and how it implements and reports CDR sanctions. To better understand 

how CDRs are used in Education’s oversight of schools, we reviewed 

relevant regulations and interviewed Education officials responsible for 

administering program review, recertification for eligibility for federal 

student aid, and oversight of the CDR including default prevention.14 We 

assessed Education’s oversight activities against goals and objectives in 

the Office of Federal Student Aid’s Fiscal Year 2015-2019 Strategic Plan, 

government standards for internal control for communicating with 

stakeholders, and Office of Management and Budget guidelines for 

disseminating public information.

 14 Education conducts program reviews to confirm that a school complies with Department 

requirements for institutional eligibility, financial responsibility, and administrative 

capability. Through its certification process, Education reviews schools to ensure that they 

are administratively and financially capable of providing the education they promise and of 

administering these grants and loans in compliance with Title IV program requirements.

Review of Education 

Documents and Relevant 

Federal Laws and 

Regulations
Appendix I: Objectives, Scope, and 

Methodology

Page 44 GAO-18-163 Federal Student Loans

To help us understand how the default management strategies used by 

schools and default management consultants affect borrowers and 

reported CDRs, we interviewed individuals with expertise on federal 

student loans. Specifically, we interviewed experts from federal agencies 

including the Consumer Financial Protection Bureau and Education’s 

Office of Inspector General. We also interviewed experts from the 

Association of Community College Trustees, the Career Education 

Colleges and Universities, the Center for American Progress, The 

Institute for College Access & Success, Harvard’s Project on Predatory 

Student Lending, the Illinois Attorney General Office, and Young 

Invincibles.

Interviews with Experts 

and Consumer Advocates
Appendix II: Sector and Program Length of 

Schools with Selected Characteristics

Page 45 GAO-18-163 Federal Student Loans

Figure 9: Sector and Program Length of Schools with Selected Characteristics

a

Schools whose cohort default rates (CDR) were calculated using a different formula that Education 

uses for schools with fewer than 30 borrowers entering repayment in a particular cohort were 

excluded from this analysis.

b

Schools were included in this analysis if their CDR decreased by 10 percentage points or more from 

the 2009 to 2013 CDR cohorts.

c

GAO defines long-term forbearance as 18 months or more during the 3-year CDR period. Schools 

with CDRs of 30 percent or above for 3 consecutive years are at risk for CDR sanctions.

d

Schools are subject to CDR sanctions if their CDR is 30 percent or above for 3 consecutive years or 

above 40 percent in a single year. Twelve schools were subject to sanctions multiple times in penalty 

years 2014-2016. However, we only counted these schools once for this analysis.

e

Foreign schools include schools that are eligible to participate in the Direct Loan program and are 

located outside the United States.

Appendix II: Sector and Program Length of 

Schools with Selected Characteristics
Appendix III: Number of Schools Subject to 

Department of Education Cohort Default Rate 

Sanctions, 1991-2017

Page 46 GAO-18-163 Federal Student Loans

Figure 10: Number of Schools Subject to Department of Education Cohort Default Rate Sanctions, 1991-2017

 

Note: Schools are generally subject to sanctions if their CDRs are above certain thresholds. The CDR 

calculation and thresholds have changed over time. Education switched from a 2-year CDR 

calculation to a 3-year calculation as required by the Higher Education Opportunity Act. 2014 was the 

first year schools were subject to sanctions as a result of their 3-year CDR. Schools that are subject 

to sanctions may avoid sanctions if they successfully appeal. As a result, the same school may be 

subject to sanctions in multiple years. Schools may be double-counted if their CDRs exceeded more 

than one threshold in the same penalty year.

Appendix III: Number of Schools Subject to 

Department of Education Cohort Default 

Rate Sanctions, 1991-2017
Appendix IV: Comments from the U.S. 

Department of Education

Page 47 GAO-18-163 Federal Student Loans

Appendix IV: Comments from the U.S. 

Department of Education
Appendix IV: Comments from the U.S. 

Department of Education

Page 48 GAO-18-163 Federal Student Loans
Appendix IV: Comments from the U.S. 

Department of Education

Page 49 GAO-18-163 Federal Student Loans
Appendix IV: Comments from the U.S. 

Department of Education

Page 50 GAO-18-163 Federal Student Loans
Appendix V: GAO Contact and Staff 

Acknowledgments

Page 51 GAO-18-163 Federal Student Loans

Melissa Emrey-Arras, (617) 788-0534 or emreyarrasm@gao.gov

In addition to the contact named above, Kris Nguyen and Debra Prescott 

(Assistant Directors), Brian Schwartz (Analyst-in-Charge), Alex Galuten, 

Raheem Hanifa, John Karikari, Kirsten Lauber, Jeffrey G. Miller, John 

Mingus, Jeff Tessin, Khristi Wilkins, and Stephen Yoder made key 

contributions to this report. Additional assistance was provided by Susan 

Aschoff, Rachel Beers, James Bennett, Deborah Bland, Jason Bromberg, 

Alicia Cackley, Marcia Carlsen, David Chrisinger, William Colvin, Sheila 

McCoy, Arthur Merriam, Jessica Orr, Ellen Phelps Ranen, Phillip Reiff, 

Barbara Steel-Lowney, and Christopher Zbrozek.

Appendix V: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments

(100859)
The Government Accountability Office, the audit, evaluation, and investigative 

arm of Congress, exists to support Congress in meeting its constitutional 

responsibilities and to help improve the performance and accountability of the 

federal government for the American people. GAO examines the use of public 

funds; evaluates federal programs and policies; and provides analyses, 

recommendations, and other assistance to help Congress make informed 

oversight, policy, and funding decisions. GAO’s commitment to good government 

is reflected in its core values of accountability, integrity, and reliability.

The fastest and easiest way to obtain copies of GAO documents at no cost is 

through GAO’s website (https://www.gao.gov). Each weekday afternoon, GAO 

posts on its website newly released reports, testimony, and correspondence. To 

have GAO e-mail you a list of newly posted products, go to https://www.gao.gov

and select “E-mail Updates.”

The price of each GAO publication reflects GAO’s actual cost of production and 

distribution and depends on the number of pages in the publication and whether 

the publication is printed in color or black and white. Pricing and ordering 

information is posted on GAO’s website, https://www.gao.gov/ordering.htm. 

Place orders by calling (202) 512-6000, toll free (866) 801-7077, or 

TDD (202) 512-2537.

Orders may be paid for using American Express, Discover Card, MasterCard, 

Visa, check, or money order. Call for additional information.

Connect with GAO on Facebook, Flickr, Twitter, and YouTube.

Subscribe to our RSS Feeds or E-mail Updates. Listen to our Podcasts.

Visit GAO on the web at https://www.gao.gov.

Contact:

Website: https://www.gao.gov/fraudnet/fraudnet.htm

E-mail

Automated answering system: (800) 424-5454 or (202) 512-7470

Orice Williams Brown, Managing Director, WilliamsO@gao.gov, (202) 512-4400, 

U.S. Government Accountability Office, 441 G Street NW, Room 7125, 

Washington, DC 20548

Chuck Young, Managing Director, youngc1@gao.gov, (202) 512-4800

U.S. Government Accountability Office, 441 G Street NW, Room 7149 

Washington, DC 20548

James-Christian Blockwood, Managing Director, spel@gao.gov, (202) 512-4707

U.S. Government Accountability Office, 441 G Street NW, Room 7814, 

Washington, DC 20548

GAO’s Mission

Obtaining Copies of 

GAO Reports and 

Testimony

Order by Phone

Connect with GAO

To Report Fraud, 

Waste, and Abuse in 

Federal Programs

Congressional 

Relations

Public Affairs

Strategic Planning and 

External Liaison

Please Print on Recycled Paper.