Federal Student Aid: Timely Performance Plans and Reports Would Help Guide and Assess Achievement of Default Management Goals
Published: 2003-02-14T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: During fiscal year 2002, an estimated 5.8 million people borrowed about $38 billion in federal student loans. Despite a dramatic reduction in annual default rates on those loans since fiscal year 1990 (from 22.4 to 5.9 percent), the total volume of dollars in default doubled to nearly $22 billion by fiscal year 2001 from about $11 billion in fiscal year 1990. During that same period, the total student loans outstanding grew from $54.1 billion to $233.2 billion. The Department of Education's Office of Federal Student Aid (FSA) manages the nation's student financial assistance programs authorized under title IV of the Higher Education Act (HEA). In 1998, Congress amended the HEA and established FSA as a performance-based organization. Among other requirements, the HEA called for FSA to annually develop 5-year plans, issue annual reports, and consult with stakeholders regarding their delivery system. GAO initiated a review to assess FSA's default management efforts and results.
section_title: What GAO Found
paragraphs: FSA's default management goals were mostly to prevent defaults, increase collections, and verify student eligibility, but the agency lacked a plan to guide its efforts. FSA had 39 default management goals for fiscal years 2000 through 2002. However, the goals changed significantly during this period and FSA did not annually prepare 5-year performance plans as required by the HEA. FSA met or exceeded most goals, but did not prepare timely performance reports. According to our analysis, FSA met or exceeded performance targets for 36 of its 39 default management goals during fiscal years 2000 through 2002. However, FSA did not issue performance reports for fiscal years 2000 and 2001, as required by the HEA. Instead, in December 2002, FSA issued one report for both fiscal years that lists accomplishments, but does not clearly indicate the extent to which goals were or were not met. Suggestions from survey respondents did not indicate the need for additional goals. While about one-third of the 23 school officials who responded to our survey made suggestions about ways that FSA could better assist them, none of the suggestions indicated the need for additional default management goals. FSA assisted all schools by sharing default management information through symposiums and other media, and provided individual assistance to some schools through visits and telephone calls. Most of the responding officials were generally pleased with FSA's assistance. The suggestions that officials made did not indicate a need for additional goals because they either related to existing goals or addressed operational issues.

section_title: Letter
paragraphs: During fiscal year 2002, an estimated 5.8 million people borrowed about  $38 billion in federal student loans to help meet their educational needs.  This is more than triple the $11.7 billion borrowed in fiscal year 1990.  Despite a dramatic reduction in annual default rates on those loans since  fiscal year 1990 (from 22.4 to 5.9 percent), the total volume of dollars in  default had grown to nearly $22 billion by fiscal year 2001 from about $11  billion in fiscal year 1990.  During the same period, the total student loans  outstanding grew from $54.1 billion to $233.2 billion.
The Department of Education’s Office of Federal Student Aid (FSA) is  responsible for managing and administering the nation’s student financial  assistance programs authorized under title IV of the Higher Education Act  (HEA) of 1965, as amended. In 1998, the Congress amended HEA to  establish FSA as a performance-based organization (PBO) in order to  address longstanding management weaknesses. Among other  requirements, HEA called for FSA to annually develop 5-year plans that  establish measurable goals and to issue annual reports on the extent to  which the goals were met. The intent of this law was to provide among  other things, a greater level of accountability for FSA’s administration of  programs.  Additionally, HEA requires FSA to seek the opinions and  suggestions of postsecondary institutions and other stakeholders, such as  lenders and borrowers, regarding their delivery system.  Because of the  large volume of dollars at-risk, we undertook this study to determine (1)  what FSA’s default management goals were for fiscal years 2000 through  2002, (2) whether FSA had achieved its stated performance goals, and   (3) whether school officials from schools with large potential losses from  defaults—schools with high default rates or a high volume of dollars in  default—had suggestions that indicated the need for additional default  management goals.
To achieve our objectives, we reviewed HEA to identify FSA’s roles and  responsibilities, interviewed FSA officials responsible for overseeing and  administering student aid programs, and obtained and analyzed available  data and reports on FSA’s performance goals and accomplishments for  fiscal years 2000--2002. In addition, we interviewed FSA officials regarding  assistance provided to schools, particularly, schools with high default  rates and those with a high volume of dollars in default. We attempted to  contact officials at 31 schools with high default rates or a high volume of  dollars in default to ask them their views of the assistance provided by  FSA and to obtain their suggestions on ways that FSA could better assist  them. Officials from 23 of the 31 schools agreed to participate in our  survey. We conducted our work between September 2002 and January  2003 in accordance with generally accepted government auditing  standards. See appendix I for additional information about our scope and  methodology.
subsections: section_title: Background
paragraphs: Title IV of HEA authorized several student aid programs including the  Federal Family Education Loan (FFEL) and the William D. Ford Direct  Loan (Direct Loan) programs, the Federal Pell Grant program, and  campus-based aid programs. The FFEL and Direct Loan programs are the  largest source of aid for students. The FFEL program provides loans to  eligible students and parents through participating private lenders that  receive a federal guarantee of repayment if the borrower defaults. Under  the Direct Loan program, eligible students and parents borrow funds  directly from the federal government through participating schools. As of  October 2002, about 6,400 schools participated in one or more of the title  IV student aid programs. To be eligible to participate in the FFEL and  Direct Loan programs, schools must manage their loan portfolios to keep  the default rate for their loans below established limits.
The national student loan default rate, also known as the national cohort  default rate (CDR), is defined as the percentage of borrowers who enter  repayment status in a certain fiscal year and default before the end of the  next fiscal year on Federal Stafford Loans and, under certain  circumstances, Federal SLS loans, and Direct Stafford Loans. For example,  the fiscal year 2000 CDR of 5.9 percent represents the percentage of  borrowers whose first loan repayments came due between October 1,  1999, and September 30, 2000, and who, as of September 30, 2001, had  defaulted. The national CDR is an aggregate of all postsecondary  institutional default rates. The CDR for schools with 30 or more borrowers  in repayment is calculated based on the percentage of borrowers entering  repayment on loans in a fiscal year and defaulting during that fiscal year or  the following fiscal year. FSA issues draft CDRs and supporting data to  schools in January or February of each year for review. A school may  challenge the draft default rate information if it identifies inaccuracies in  data.  In addition, a school with CDRs of 25 percent or more for 3  consecutive years can appeal the draft rate if it can show that the number  of students who obtained loans did not exceed approximately 3.8 percent  of the total number of students at the school, while schools with CDRs  over 40 percent in 1 year can appeal the draft rate if it can show that the  number of students who obtained loans did not exceed approximately 6  percent of the total number of students at the school. FSA makes revisions  as needed, and releases the final CDR to the schools and the public no  later than September 30 of each year.
Unless a school has 30 or fewer borrowers who entered repayment for the  3 most recent fiscal years, it could lose its eligibility to participate in some  title IV student aid programs if its final CDR exceeds established  thresholds. For example, under HEA, if schools have CDRs of 25 percent  or more for 3 consecutive years, they face loss of eligibility to participate  in the FFEL and Direct Loan programs.  A regulation imposes the same  restriction on eligibility if schools have CDRs exceeding 40 percent in a  given year.  Additionally, schools that are ineligible to receive FFEL and  Direct Loans due to CDRs of 25 percent or more for 3 consecutive years  are also generally prohibited by statute from receiving Pell Grants. These  schools are subject to suspension from title IV programs for the remainder  of the fiscal year in which FSA notifies them of termination and the  following 2 fiscal years. However, schools have appeal rights and retain  program eligibility while their appeals are pending. Schools may apply to  be reinstated to participate in title IV loan and/or Federal Pell Grant  programs after the later of the expiration of their suspension or   18 months after the effective date of their termination. Over the last  decade, approximately 1,200 schools have been subject to suspension due  to default rates above the 25 percent threshold for fiscal years 1998  through 2000.
From fiscal year 1990 to fiscal year 1999, the national student loan default  rate declined from 22.4 percent to 5.6 percent. In fiscal year 2000, the rate  climbed slightly to 5.9 percent. Figure 1 shows the trend in national cohort  default rates from fiscal years 1990 through 2000.
Despite the overall progress made in reducing the national default rate, the  cumulative student loan funds in default had doubled to almost $22 billion  by fiscal year 2001 from their fiscal year 1990 level of nearly $11 billion.  During this same time period, the total student loan portfolio grew by  more than 400 percent from $54.1 billion to $233.2 billion and the defaults,  as a percent of the total loan portfolio, declined from 20.1 percent to 9.4  percent. Table 1 shows the outstanding portfolio and defaulted loan  balances for FFEL and Direct Loans as well as the total defaulted loans as  a percentage of the total outstanding loan portfolio for fiscal years 1990  through 2001.
FSA manages and administers the federal student financial assistance  programs and is responsible for default management. Since 1990, because  of concerns about Education’s vulnerabilities to losses due to fraud,  waste, abuse, and mismanagement, we have included student financial aid  programs on our high-risk list. To address longstanding management  weaknesses, the Congress amended HEA in 1998, establishing FSA as a  performance-based organization (PBO) to improve Education’s delivery of  student financial aid services. As a PBO, FSA has increased flexibilities,  subject to the direction of the Secretary of Education, in certain  government operations, such as hiring and procurement, provided that it  establish and operate according to a 5-year performance plan with  measurable goals and specific annual performance targets. HEA also  requires that FSA annually prepare and submit, through the Secretary of  Education, a 5-year plan that is available to the public, and annual  performance reports to the Congress.  Furthermore, HEA requires FSA’s  Chief Operating Officer (COO) to ask its stakeholders about the degree of  satisfaction with the delivery system and to seek suggestions on  improvements.
section_title: FSA’s Default Management Goals Were Mostly to Prevent Defaults, Increase Collections, and Verify Student Eligibility, but the Agency Lacked a Plan to Guide its Efforts
paragraphs: FSA identified 39 default management goals for fiscal years 2000 through  2002, which were mainly to prevent defaults, increase collections, or verify  student eligibility. However, FSA did not prepare annual 5-year  performance plans required by HEA. Such plans would have helped set the  overall direction for FSA and guided its default management and other  agency goals.
subsections: section_title: FSA Identified 39 Default Management Goals During Fiscal Years 2000--2002
paragraphs: FSA goals aimed at preventing student loan defaults included such efforts  as increasing students’ awareness of their repayment obligations through  various publications, using voluntary flexible agreements with four  guaranty agencies to prevent defaults, and pursuing default management  strategies such as using software to assist schools in identifying delinquent  Direct Loan borrowers at risk of default. FSA’s goals to increase  collections focused on facilitating repayment for borrowers in good  standing as well as aggressively pursuing those in default. For example,  they planned to use tools such as Internet billing and on-line  correspondence to facilitate repayment for borrowers in good standing  and used administrative wage garnishments and federal tax refund  recoveries to pursue borrowers in default. These collection goals included  fostering competitive behavior among its private collection agencies to  increase collections on defaulted loans, matching student loan records  with federal databases such as the Health and Human Services (HHS)  National Directory of New Hires database to locate defaulted borrowers,  and using other available default recovery methods. The FSA goals to  improve student eligibility included verifying students’ or their families’  income through a data match with Internal Revenue Service (IRS) records  and apprising foreign postsecondary institutions about the rules and  regulations for title IV assistance and the need to limit financial aid awards  to eligible students only.
Of FSA’s 39 default management goals during fiscal years 2000 through  2002, 5 were continued throughout the period and 6 more were continued  for 2 of the 3 years. Specifically, the goals that continued for all 3 years  were to maintain the cohort default rate, implement and monitor voluntary  flexible agreements with a limited number of guaranty agencies, reduce  default rates over the life of the loan, increase the recovery rate for  defaulted loans, and increase the number of student aid applications filed  electronically. As for those that continued for 2 years, they addressed   (1) reports to the Congress on the progress and performance of VFAs,   (2) student awareness publications, (3) use of the new hires database,   (4) NSLDS data quality, (5) program monitoring and assistance to schools,  and (6) eliminating fraudulent death and disability cases. Further, most of  these goals began in 2001 and were continued in 2002.
However, 28 of the 39 goals were single year goals—6 were implemented  in fiscal year 2000, another 6 were implemented in fiscal year 2001, and   16 more were implemented in fiscal year 2002. Such significant changes  may reflect the fact that FSA did not have a long-term plan to direct its  default management goals. Although agency officials stated that many of  the goals were reached and did not need to be continued in the next year,  some were discontinued for various other reasons. For example, agency  officials indicated that a 2001 goal to implement a pilot program to track  student enrollment at foreign schools in an effort to reduce the potential  of loans being obtained through fraudulent means was completed.  However, available documents show that the pilot program was  discontinued because a key institution complained that the program  requirements were too burdensome and withdrew from the pilot.  Furthermore, it is not clear from available documentation whether this  program will be revisited or continued in subsequent years, even though  foreign schools collectively administer more than $225 million in federal  student financial assistance. Recently, GAO reported that the agency  certified a fictitious foreign school to participate in the FFEL program and  approved loans for three fictitious students. As such, there continues to be  a need for the agency to have a goal to reduce the potential for students at  foreign schools to obtain loans through fraudulent means. Appendix II lists  FSA’s default management goals for fiscal years 2000, 2001, and 2002.
section_title: FSA Did Not Prepare a 5-Year Performance Plan to Guide Its Efforts
paragraphs: Although FSA prepared several internal planning documents that  identified its default management goals for each year, as we reported  previously, Education failed to prepare annual 5-year performance plans  as required by HEA to guide its default management and other agency  goals. FSA prepared a performance plan for the 2000--2004 fiscal years, but  the goals in that plan were only for fiscal year 2000. Additionally, FSA did  not prepare performance plans for the periods covering fiscal years 2001  to 2005 or fiscal years 2002 to 2006. FSA officials stated that their  interpretation of the law allowed them to release a plan every 5 years and  operate with annual internal plans.
FSA prepared internal documents that identified its default management  goals for fiscal years 2001 and 2002. These documents listed the goals for  each year separately, identified the responsible managers or units,  specified the time frames involved, and sometimes described specific  steps for implementation and expected outcomes. However, they did not  explain the basis for changing the goals or relate them to longer-term  agency goals.
section_title: FSA Met or Exceeded Most Goals, but Did Not Prepare Timely Performance Reports
paragraphs: According to our analysis of FSA’s internal documents, we determined  that the agency met or exceeded performance targets for 36 of its 39  default management goals during fiscal years 2000 through 2002.   However, as previously reported, Education did not prepare timely reports  on FSA’s performance for fiscal years 2000, as required by HEA.  FSA also  did not issue a timely report for fiscal year 2001.  FSA’s performance  report for fiscal year 2002 was not due at the time of this review.
subsections: section_title: FSA Met or Exceeded Performance Targets for Most of Its Default Management Goals
paragraphs: FSA met or exceeded nearly all of the performance targets related to its   39 default management goals during fiscal years 2000 through 2002. For  example, FSA met its goal to ensure that default recoveries exceeded new  defaulted dollars in fiscal year 2002 by recovering $4.87 billion compared  to the $2.7 billion that went into default. Also, FSA met its target to  support the administration’s efforts to improve its data matching  capabilities with the IRS by proposing changes to legislation that would  authorize expanded use of tax data. Additionally, FSA met its fiscal year  2000 goal to expand its capabilities that allow students to edit and save  changes to federal student aid applications on the Web. FSA exceeded  most of its performance targets for defaulted loan collection goals. For  example, FSA exceeded its 2002 goal to increase the combined recovery  rate for guaranty agencies to 15 percent by 1.76 percentage points. The  agency also exceeded its 2002 goal to collect $200 million in defaulted  loans by $60 million through expanded use of the Department of Health  and Human Services National Directory of New Hires database.
FSA did not achieve three of its default management goals during the   3-year period. These goals were to (1) prepare a report to the Congress by  the end of fiscal year 2002 on the voluntary flexible agreements,   (2) implement a multiyear program in each of the three fiscal years to  further reduce defaults over the life of the loan, and (3) analyze NSLDS to  identify improvements that could be made in fiscal year 2002. While each  of these goals was listed for at least 2 of the 3 fiscal years, FSA did not  always provide information on why they were not achieved. Appendix III  lists the default management goals and indicates whether the goals were  met.
section_title: FSA’s Fiscal Years 2000 and 2001 Performance Report Was Not Timely and Did Not Indicate Whether Goals Were Met
paragraphs: FSA did not prepare performance reports that conform to the  requirements in HEA for fiscal years 2000 and 2001. HEA requires FSA to  issue a performance report for each year that includes an evaluation of the  extent to which the goals established in the prior year’s plan were met. In  December 2002, FSA issued a performance report that included its  accomplishments for both fiscal year 2000 and fiscal year 2001.  Furthermore, although the report lists several accomplishments, it does  not provide related performance goals. Therefore, the report does not  clearly indicate the extent to which goals were or were not met. For  example, the report points out that the collections on defaulted student  loans increased from $191 million in fiscal year 1999 to $228 million in  fiscal year 2000 to $230 million in fiscal year 2001. Although the increases  are noteworthy, there is no information on the related goal, or whether or  not the goals were actually met. Additionally, the report includes  information on accomplishments that did not occur during fiscal years  2000 and 2001. For example, the report states that in early 2002 the  Department delivered a report to the Congress on the VFAs, distributed a  foreign schools handbook in May 2002, and piloted electronic billing and  payment in the Direct Loan program in January 2002 and went into full  production in March 2002. Education did not include the related fiscal year  2002 performance goals.
section_title: Surveyed School Officials’ Suggestions Did Not Indicate the Need for Additional Goals
paragraphs: Although nearly a third of the school officials that participated in our  survey made suggestions about ways that FSA could better assist them,  none of the suggestions indicated that FSA needed additional default  management goals. FSA provided similar assistance to all schools by  sharing default management strategies and information through  symposiums, workshops, and other media, and provided individual  assistance to some schools through on-site visits and telephone calls.  Although officials from 16 of the 23 schools reported that they were  pleased with one or more services provided by FSA, 7 of the 23 officials  suggested ways that FSA could better assist them. Their suggestions  included improving the usefulness and access to loan information in  NSLDS, providing opportunities for more localized default management  training, and making it easier to identify and contact the right FSA  program officials to address technical concerns. However, these  suggestions did not indicate a need for additional default management  goals because they either related to existing goals or addressed  operational issues.
subsections: section_title: FSA Provided General Assistance to All Schools and Individual Assistance to Some
paragraphs: FSA provided general assistance to all schools, including those with high  default rates and those with a high volume of dollars in default, and  provided individual assistance to some schools to assist with their default  management efforts. According to FSA officials, one of its primary  methods of assisting schools is through its National Default Prevention  Day symposium, a 1-day event to share default management best practices.  In 2001 and 2002, FSA sponsored this event in 12 cities nationwide and  invited officials from numerous entities, including schools participating in  federal loan programs, lenders, and guaranty agencies. FSA also provided  schools with default management information at various conferences and  through its Information for Financial Aid Professionals (IFAP) Web site.  For example, at a November 2002 FSA Electronic Access Conference, FSA  officials provided information on the late-stage delinquency assistance  initiative intended to help schools identify delinquent Direct Loan  borrowers at risk of default. FSA also provided technical publications,  regulations, and policy guidance on the administration of the federal  student aid programs to schools through the IFAP Web site. FSA officials  also said they provided individual assistance to some schools through on- site visits and telephone calls. FSA officials said during a typical on-site  visit to a school, they presented information to school officials on the  various aspects of default prevention and the advantages of forming a  default management team comprised of representatives from various  offices. They also helped schools establish individual default management  plans, if the school did not want to use the standard one developed by  FSA, and they helped assess the schools’ default management and  prevention practices.  A total of 16 of the 23 school officials reported that  they were generally pleased with one or more services provided by FSA,  with most commenting that the assistance was useful in helping them to  keep their default rates and/or dollars in default low.
section_title: Suggestions From Survey Respondents Did Not Indicate the Need for Additional Goals, But Could Serve to Improve FSA’s Assistance to Schools
paragraphs: The 11 suggestions made by officials at 7 of the 23 schools responding to  our survey did not indicate the need for additional goals because either  FSA already had goals related to them or the suggestions related to  operational matters. Nonetheless, the suggestions could help FSA to better  assist schools with their default management efforts. FSA had goals that  addressed, to some extent, five of the suggestions. Officials made   4 suggestions to improve the usefulness of loan data and access to the loan  information in NSLDS. One school official suggested that FSA could  improve the usefulness of NSLDS data by allowing users to distinguish the  principal amount borrowed, the accrued interest, and service charges. A  second school official suggested that the data be updated more frequently  to remove students that are no longer in default to help prevent schools  from making unnecessary calls. Another school official suggested that FSA  provide historical data detailing the breakout of dollars going into default.  Besides these suggestions, a fourth school official suggested that FSA  provide easier access to the system for guarantors and allow them to view  school specific information on delinquent and defaulted borrowers. FSA  had goals to improve the NSLDS in 2000 and 2002. FSA’s fiscal year 2000  NSLDS goal was to continue to work with guaranty agencies and lenders  to maintain the quality of data in NSLDS and its fiscal year 2002 NSLDS  goals were to analyze NSLDS data to identify students ineligible for federal  aid. An official from a large public university with a high volume of dollars  in default suggested that FSA provide a profile of the various demographic  groups that make up the school’s CDR. In support of its continuing goal to  keep the default rates low, FSA provides schools—at their request—with  default rate analysis tools to assist them in identifying the defaulted  student population. FSA typically shares information about default  management tools at its National Default Prevention Day symposiums.  This official attended the national default prevention day in 2001 but was  still unaware of the analysis tool. This suggestion indicates that there may  be a need for additional ways to disseminate information about default  analysis tools.
The remaining 6 suggestions addressed operational issues—where training  is held, who to contact with questions, and when information is shared.  Three school officials suggested that FSA hold default management  training sessions in locations near them because they lacked funding to  travel to FSA’s National Default Prevention Day symposiums and/or  conferences held in larger cities, such as Washington, D.C., and San  Francisco. Two of the officials were from small proprietary schools and  the other was a large public university. Additionally, two officials  suggested that FSA provide better ways to identify and contact  appropriate program officials to address their default management  concerns. One official said that he and others have had difficulty getting  FSA staff to return their telephone calls and finding the right FSA program  official to address their concerns. This school official suggested that FSA  develop a guide to identify appropriate program officials. The other school  official expressed frustration that FSA staff was not always knowledgeable  about the loan data for her school. This school official suggested that FSA  make certain staff members responsible for knowing about information  related to particular schools. Finally, one school suggested that FSA  provide schools with updates on changes in federal student aid  information at the beginning of the calendar year instead of during the fall  enrollment season, which typically begins in August or September. While  these suggestions do not indicate the need for additional goals, they  indicate areas where school officials would like changes made.
section_title: Conclusions
paragraphs: FSA has identified many default management goals and its internal  documents and reports indicate that it achieved most of its default  management goals for fiscal years 2000 through 2002. Furthermore, school  officials who responded to our survey did not offer suggestions that  indicated FSA should have additional goals. However, neither the  Congress nor the public can determine whether FSA’s default management  or other program goals are in support of long-term program objectives or  whether goals have been met because FSA has not prepared annual plans  and issued performance reports as required by HEA. The legislation  authorizing FSA as a PBO requires the agency to operate within the  framework of a clear plan and to be accountable by reporting annually on  its progress. Without the required plans and timely and clear performance  reports, neither the Congress nor the public can determine whether FSA,  as a PBO, is operating within the spirit of the law and making progress  toward achieving its goals.
section_title: Recommendations to the Secretary of Education
paragraphs: To ensure the public that FSA has established and sustained default  management and other program goals that support long term objectives,  we recommend that the Secretary of Education and FSA’s Chief Operating  Officer (COO) produce a 5-year performance plan annually as required by  HEA.
To provide essential information to the Congress about its progress  toward achieving default management and other agency goals during a  given year, we recommend, as we did in 2002, that the Secretary of  Education and FSA’s COO prepare and issue reports to the Congress on  FSA’s performance that are timely and clearly identify whether  performance goals were met.
section_title: Agency Comments and Our Evaluation
paragraphs: We received written comments on a draft report from FSA.  These  comments are reprinted in appendix IV.  FSA said that it would take  actions to address our recommendations.  FSA recognized the requirement  to annually produce a 5-year plan and said it would revise the plan this  spring.  FSA also said that it would meet the deadline to finalize the fiscal  year 2002 annual report.  Additionally, FSA suggested that we include  information on the total loan portfolio to provide a more balanced  presentation of the dollar increase in the defaulted loan portfolio, which  we have done.
However, FSA disagreed with our assessment that its internal plans were  not appropriate to guide its default management efforts.  FSA stated that  its results clearly demonstrate that its internal plans, coupled with  Education’s strategic and annual plans, were appropriate to guide its  efforts.  As we have noted in this report, HEA requires FSA to prepare  annual 5-year plans in consultation with the Congress, institutions of  higher education, and other stakeholders.  This planning process helps to  increase accountability and ensure that the goals are relevant to  stakeholders.  Furthermore, Education’s annual and strategic plans only  discuss default management goals in broad terms that are not specific  enough to guide FSA’s default management efforts.
Additionally, FSA questioned our assessment that its internal planning  documents did not explain the basis for establishing, continuing, or ending  goals from year to year.  FSA stated that the fiscal year 2002  documentation was reasonable for explaining the basis for establishing,  continuing, or ending projects.  While the fiscal year 2002 documentation  provided more detail than the documents for fiscal years 2000 and 2001, it  did not explain why goals were established, continued, or ended from one  year to the next.
Further, FSA stated that we improperly indicated that the National Student  Loan Data System (NSLDS) data quality effort was a goal for only two  years.  We reported this as a “2-year” goal based on the documentation  FSA provided.  The documentation listed NSLDS as a goal for fiscal years  2000 and 2002, but not for fiscal year 2001.
We are sending copies of this report to the Secretary of Education, the  Chief Operating Officer of Education’s Office of Federal Student Aid, the  Director of the Office of Management and Budget and appropriate  congressional committees. Copies will also be made available to other  interested parties upon request. Additional copies can be obtained at no  cost from our Web site at www.gao.gov.
If you or your staff should have any questions, please call me at (202) 512- 8403.  The key contributors to this report are listed in appendix V.
section_title: Appendix I: Scope and Methodology
paragraphs: Overall, we obtained and reviewed several key documents, interviewed  responsible officials, and surveyed officials from selected institutions of  higher education. We reviewed HEA to identify FSA’s overall  responsibilities and reporting requirements as a performance-based  organization and to obtain background on the various types of student aid  programs it authorizes. We also reviewed our prior reports and other  documents to obtain background information and perspective on  operational challenges faced by FSA. In addition, we obtained and  analyzed fiscal year 1990 to 2001 trend data on the number of borrowers,  default rates, and dollars in default for the guaranteed and Direct Loan  programs.
To determine what FSA’s default management goals were for fiscal years  2000 through 2002, we reviewed various FSA internal planning documents,  including program plans for fiscal years 2000, 2001, and 2002. These  documents listed the goals for all FSA programs, including the default  management goals. Additionally, we reviewed FSA’s High-Risk Plan for  fiscal year 2002, which summarized the major actions the agency planned  to take with regard to default management and other issues in order to  remove its student financial assistance programs from our high-risk list.  We also interviewed FSA officials responsible for managing and  administering student financial assistance programs in order to clarify  which goals were related to default management. On the basis of these  documents and information obtained from the interviews, we developed a  summary of the default management goals for fiscal years 2000 through  2002.
To determine whether FSA had achieved the performance targets for its  default management goals, the second objective, we obtained and  analyzed available data and reports related to the performance for fiscal  years 2000, 2001, and 2002 goals. We discussed both the performance  targets achieved and the performance targets missed during interviews  with FSA officials. We determined whether a goal was met or not by  reviewing the agency’s collective efforts over a 3-year period, where  applicable.
To determine whether school officials from schools with high default rates  or high dollars in default had suggestions that indicated the need for  additional default management goals, our third objective, we reviewed title  IV school eligibility regulations, interviewed FSA officials, analyzed default  data, and surveyed officials from selected schools. We identified and  reviewed title IV eligibility criteria for program participation, including the  cohort default rate (CDR), which is used to determine a school’s  continued eligibility to participate in FFEL, Direct Loan, and Federal Pell  Grant programs and procedures for reinstatement after schools are  removed from the program. We interviewed FSA officials responsible for  assisting schools with their default management efforts to determine the  types of assistance provided to all schools, ascertain whether FSA  provided additional assistance to schools at risk of losing their eligibility  to continue participating in the student loan programs due to high default  rates, and determine whether any additional assistance was provided to  schools with high amounts of dollars in default. We participated in the  2002 National Default Prevention Day held in August 2002 in Washington,  D.C., because this was one of the primary methods FSA officials use to  provide default management information to schools. Additionally, we  reviewed regional listings of school visits made by FSA during fiscal years  2000, 2001, and 2002.
We obtained data on default rates for fiscal years 1999 and 2000 (about  6,000 schools) and dollars in default for fiscal year 2000 (about 5,000  schools) for all schools that participated in the Title IV programs. We  analyzed fiscal year 1999 default rate data to identify those with default  rates above the regulatory thresholds – default rates at or above 25 percent  for 3 consecutive years or above 40 percent in one year. We determined  that a total of 55 schools had default rates that exceeded regulatory  thresholds, 46 of these were excluded from our review due to exceptional  mitigating circumstances, such as having 30 or fewer borrowers in  repayment on loans, and the remaining 9 schools were candidates for  removal from the loan programs. FSA officials verified our analysis. We  also obtained and analyzed data on default rates and dollars in default for  fiscal year 2000 to identify schools with default rates between 20 and   24 percent for 3 consecutive years or with default rates between 30 and   39 percent in 1 year—those at risk of removal from the program. We  identified 26 of these schools. In addition, we obtained data from FSA  officials on all schools with defaulted loans (about 4,000) and the amount  of dollars in default for each school. We analyzed the data and identified  47 schools with at least $1 million in defaulted loans as of fiscal year 2000.
We developed a survey designed to determine the extent that officials  from schools with high default rates and schools with high volumes of  dollars in default were knowledgeable about the methods used by FSA to  assist them, had participated in any of the FSA conferences or used any of  the tools provided by FSA. Additionally, the survey asked the officials  about their views of the assistance provided by FSA and if they had  suggestions about ways that FSA could better assist them. We focused on  schools with high default rates because historically they were a significant  factor contributing to high national cohort default rates, and schools with  high dollars in default because they represent most of the total dollars in  default.
We selected and attempted to contact officials at 31 postsecondary  schools, which included 4-year institutions, 2-year institutions, and non- degree institutions. Although the 31 schools are not statistically  representative of the universe of postsecondary schools that receive title  IV funds, we selected them to provide a cross-section of schools with high  default rates and high dollars in default. Our sample included all 9 schools  with default rates above regulatory thresholds based on fiscal year 1999  CDRs, the latest data available at the time we drew the sample. We also  randomly selected 12 schools with default rates near regulatory thresholds  based on fiscal year 2000 CDRs, and 10 randomly selected schools with $1  million or more in defaulted loans as of fiscal year 2000. We limited the  number of schools in the randomly selected groups in order to have the  three groups of nearly equal size. In total, directors or financial aid  administrators from 23 schools participated in our survey. The 23 schools  consisted of 7 of the 9 schools with CDRs above regulatory thresholds, 6 of  the 12 schools with CDRs near the regulatory thresholds, and all 10 of the  schools with a high volume of dollars in default. Table 2 summarizes the  postsecondary schools that participated in our survey.
section_title: Appendix II: FSA’s Default Management Goals for Fiscal Years 2000-2002
subsections: section_title: Demonstrate pursuit of improved default management and prevention strategies. Increase by 25 percent the number of visitors to the Direct Loan (DL) Servicing Web site. Implement improved DL servicing infrastructure to better support financial management reporting and customer service. Integrate the Debt Management Collection System (DMCS) into the common borrower system. 2002: Keep the loan program’s cohort default rate under 8 percent. 2001: Keep the cohort default rate under 8 percent. 2000: Keep the cohort default rate under 10 percent. 2002: Monitor the existing Voluntary Flexible Agreements (VFA) and provide operational oversight. 2001: Implement and monitor at least four VFAs for program participation. Launch all four no later than March 2001. 2000: Enter into no more than six voluntary flexible agreements (VFAs). 2002: Publish and release the VFA Report to the Congress. 2001: Submit a report to the Congress on the viability of expanding the VFA pilot. Work with the guaranty agency community to establish common performance metrics primarily in the areas of delinquency, default aversion and collections. 2002: Implement a multi-year program to further reduce cohort and lifetime default rates. 2001: Establish a program and multi-year goals to further reduce the cohort and lifetime default rates. 2000: Reduce the lifetime default rate. Utilize the Financial Partners Data Mart as a basis to establish risk management assessment ability of lenders, servicers, and guaranty agencies. Identify institutions abusing FSA programs through data mining using student information. 2002: Publish and disseminate five new student aid awareness publications 2001: Create new product delivery approach that will increase student aid information to students and parents. Implement Internet billing and online mailing for Direct Loan Servicing. Pilot data mining and analysis projects in DL Servicing Center aimed at improving regular collections. Ensure that default recovery totals exceed default claim totals for the year. Increase the number of lenders using electronic funds transfer for Direct Consolidation by 100 percent, from 13 to 26. 2002: Increase the default recovery rate to 15 percent. 2001:Keep the default recovery rate at 10 percent or higher. 2000: Keep the default recovery rate at 10 percent or higher. Improve default recovery rate to new goal of $914 million. 2002: Expand the use of the National Directory of New Hires database to recover $200 million in defaulted student loans. 2001: Implement the National Directory of New Hires database matching program.
paragraphs: Continue use of performance-based default collections contracts.  2002: Support the administration’s efforts to improve the data match with the IRS.  2001: Analyze the results of IRS statistical study regarding electronic data match.   Demonstrate value of National Student Loan Data System (NSLDS) default match.  2002: Prepare annual NSLDS analysis of students who receive loans although they  appear to be in default and identify improvements that can be made  2000: Continue to work with guaranty agencies and lenders to maintain the quality of data  in NSLDS.  2002: Increase the number of Free Applications for Federal Student Aid (FAFSAs) filed  electronically from 5 million last year to 5.5 million with 55 percent via the Web product.  2001: Increase the number of FAFSAs filed electronically from 4 million to 5 million with 50  percent via the Web product.  2000: Increase the number of FAFSAs filed electronically from 3 million to 4 million.  Use the Common Origination Disbursement System to institute an eligibility check for valid  Individual Student Information Record on file for all Direct Loan recipients.  2002: Develop metrics to demonstrate that there is an appropriate balance between  providing technical assistance to schools and program monitoring.  2001: Increase program reviews by 20 percent.  Increase the total number of borrowers repaying their Direct Loans through electronic  debiting to a minimum of 400,000 borrowers.  Provide Spanish language deferment and forbearance requests at DL Servicing Web site.  Educate the foreign school community about FSA program requirements to reduce  noncompliance.  Implement a pilot program at foreign schools that would prevent false enrollments.  Make a determination on the initial cohort of recertification applications for all foreign non- medical schools eligible to participate in the Federal Family Education Loan Program.  2001: Augment the continuing campaign to eliminate false death and disability.  2000: Reduce fraudulent death and disability cases below 1998 baseline.  Conduct and complete investigative analysis on the remaining 1,300 discharges of death  and disability cases identified from the Inspector General audit.   Expand FAFSA correction on the Web capabilities.  Partner with National Student Loan Clearinghouse to eliminate mismatches in enrollment  information.  Try at least five new ways to make debt collection more effective, less costly, and more  customer-service oriented.  Increase by five, the number of guaranty agency partnerships with FSA designed to  improve portfolio management.   Expand current initiatives to help noncompliant schools and schools on reimbursement  prepare action plans to improve their management of title IV programs.   Increase the default recovery rate for loans in default held by guaranty agencies.
section_title: Appendix III: FSA’s Default Management Goals and Outcomes for Fiscal Years 2000- 2002
paragraphs: Appendix III: FSA’s Default Management  Goals and Outcomes for Fiscal Years 2000- 2002  Actions  Identify three risk elements that impact a  borrower’s ability to pay.  Also, link risk  review efforts across channels into  activities by Student Credit Management.
Increase by 25 percent  the number of visitors to  the Direct Loan (DL)  Servicing Web site.
Increase visitors through continued  enhancement of web functionality,  marketing, and making announcements  by phone messaging and mail  correspondence.
Implement improved DL  servicing infrastructure to  better support financial  management reporting  and customer service.
Negotiate phase-out of contractor.   Modernization partner to assume  accounting functions under a share-in- savings arrangement.
Integrate the Debt  Management Collection  System (DMCS) into the  common borrower  system.
Look at the imaging services provided by  three current partners to identify  commonalities that could be consolidated.
Outcomes  Identified the top three reasons  contributing to delinquency in a  sample of the direct loan  portfolio: (1) 85 percent of  borrowers did not have the  advantage of a full 6-month  grace period, (2) 76 percent had  withdrawn from school, and (3)  57 percent had not been  contacted. Also implemented  several pilot initiatives to focus  on the reasons identified for  delinquency including increased  borrower contact and other  proactive activity.  Increased visitors by 186  percent. The DL Servicing Web  site provides account  information for borrowers, online  account management and  counseling for over 5.7 million  active student loan borrowers  with a total portfolio of $73  billion.  Expected benefits of retiring old  financial reporting system:  projected net savings by fiscal  year 2005 of $8-11 million and  ongoing projected savings after  fiscal year 2005 of $4 million per  year; improved customer  service by providing a single  source of financial data; and,  increased data integrity and  employee satisfaction by  reducing training requirements  for new or transferred  employees.  Better system in place for  enhanced customer service.   Also, data mining activities and  data integrity are strengthened.
Goal/Strategy  Description  2000: Keep the cohort  default rate under 10  percent.  2001: Keep the cohort  default rate under 8  percent.  2002: Keep the loan  program’s cohort default  rate (CDR) under 8  percent.
Actions  Provide training and technical assistance,  tools for interpreting student loan data,  and default management plans.
Goal  met?
Host Student Loan Repayment  symposium, National default Prevention  Day and a number of forums.
Outcomes  The national CDR for 1998 was  6.9 percent, reported in 2000;  the national CDR for 1999 was  5.6 percent, reported in 2001;  and the national CDR for 2000  was 5.9 percent, reported in  2002.  A total of 1,500 schools  participated in National Default  Prevention Day, which  familiarized schools with FSA  promoted default management  software such as Late Stage  Delinquency Assistance  Program.
2000: Enter into no more  than six voluntary flexible  agreements (VFAs).  2001: Implement and  monitor at least four VFAs  no later than March 2001.  2002: Monitor the existing  four VFAs and provide  oversight.
Provide loan data to schools to aid in  counseling.  Accept proposals from guaranty agencies.  Establish VFAs for guaranty agencies or  provide greater operating flexibility.  Use performance measures developed in  conjunction with guaranty community to  monitor compliance and performance.
FSA received eight VFA  proposals. One proposal was  approved and awaited public  comment. Three others were  pending.  Agreements signed with  guaranty agencies in Wisconsin,  Texas, Massachusetts, and  California.  Common general indicators  used to evaluate performance of  four VFAs in comparison to  other guaranty agencies.  Interim report released because  of insufficient time to draw final  conclusions on effectiveness of  VFAs.  As of January 10, 2003, FSA’s  draft had not received clearance  for release by the secretary..  Common general indicators  created to evaluate the  performance of each VFA  performance and with guaranty  agencies not participating in the  agreements. The measures  include: analyzing the dollar  ratio of lender held loans,  utilizing a trigger rate, and  determining effectiveness at  collection recoveries  Strategies from symposium  used in repayment publication.  Created reports identifying  “buckets” of delinquency,  identifying basic characteristics  of delinquent borrower.  Implemented a pilot using credit  2001: Submit a report to  the Congress on the  viability of expanding the  VFA pilot.  2002: Publish and release  VFA Report to the  Congress  Work with the guaranty  agency community to  establish common  performance metrics  primarily in the areas of  delinquency, default  aversion and collections.
Provide a report to the Congress  consistent with 1998 authorizing  legislation on the current status of the  VFAs.  Use data from indicators, input from  guaranty agency community as well as  departmental offices to draft report.  Develop performance measures with  community workgroup, including VFAs  and other guaranty agencies to gain  consensus. Regional staff will perform  validation with program reviews.
2000: Reduce the lifetime  default rate.  2001: Establish a  program and multi-year  goals, to reduce the  cohort and lifetime default  rates.
Goal/Strategy  Description  2002: Implement a multi- year program to further  reduce cohort and lifetime  default rates.  Utilize the Financial  Partners Data Mart as a  basis to establish risk  management assessment  ability of lenders,  servicers, and guarantee  agencies.  Identify institutions  abusing FSA programs  through data mining using  student information.
Actions  templates for improvements. Develop  tools to better predict default rates and  risk analysis.
Outcomes  modeling to prioritize due  diligence efforts.  Not provided.
Goal  met?
Utilize a modified version of the system  development life cycle methodology used  to construct the data mart. Use the  existing product designed to augment  extracts to the system and link to current  operating systems.
Improvements made include:  access for guaranty users,  creation of an initial risk  scorecard to assess partner  performance and elimination of  contractor dependent reports.
Run interim update on Common  Origination and Disbursement (COD).  Use data mining to target noncompliant  schools.
Information from Social Security  Administration death match,  proper interest rates in the DL  servicing system, early  identification of noncompliant  schools, improvements to COD  to ensure that upfront matches  are in effect for DL originations.  Publications produced on  finding free scholarships,  obtaining loan forgiveness  programs for teachers, and  avoiding student scams.  Student aid information in  different languages, formats  aimed at targets audiences  including 11 “one-pagers,” a  default management brochure  for NDPD, a financial aid poster  for Native American college- bound youth, aid information in  Spanish, publications in  Braille/audio media. Information  to be distributed via high school  counselors and others in contact  with targeted audience as well  as published in newsletters and  magazines.  Direct Loan model for Electronic  Bill Presentment and Payment  (EBPP): implemented 3/22/02.  Web self-service (online  correspondence: implemented  5/10/02). Aggregator Model for  EBPP: implemented 7/29/02. An  extensive communications and  adoption strategy plan is being  implemented to let borrowers  know services are available.
2001: Create new product  delivery approach that will  increase student aid  information to students  and parents.  2002: Publish and  disseminate five new  student aid awareness  publications.
Use print and electronic media to provide  greater access to student aid information.  Obtain input from specified groups.  Translate materials.  Solicit information from individuals and  organizations to determine the  appropriate content for targeted audience,  the clarity of materials and the best tool  for information dissemination.
Implement Internet billing  and online mailing for  Direct Loan Servicing.
Initiate at least one paper to electronic  service conversion process. Electronic  servicing will provide borrowers a state of  the art tool for making payments,  receiving bills and obtaining other  correspondence.
Goal/Strategy  Description  Pilot data mining and  analysis projects in Direct  Loan Servicing Center  aimed at improving  regular collections.
Actions  Develop and implement Credit  Management Data Mart (CMDM) to  conduct data mining and portfolio  analysis. Utilize Late Stage Delinquency  Assistance. Refine due diligence tactics.  Study the correlation between credit score  and delinquency.
Goal  met?
Increase effectiveness of available  collection tools: private collection  agencies, treasury offsets, combined  regular collections and loan  rehabilitations. Utilize new tools where  possible.
Increase the number of  lenders using electronic  funds transfer (EFT) for  Direct Consolidation by  100 percent from 13 to  26.
Educate lenders about the time and cost  savings benefits of EFT. Technical  assistance is provided to lenders in the  enrollment and other phases of the  process.
2000: Keep the default  recovery rate at 10  percent or higher.  2001: Keep the default  recovery rate at 10  percent or higher.  2002: Increase the default  recovery rate to 15  percent.
Outcomes  The CMDM currently contains  demographic and financial data  for all direct loan borrowers and  will include borrowers in default  for all loan obligations held by  the Department. Increased  borrower contact efforts with  higher balance loans. A study  underway to determine if a  correlation exists between a  borrower’s credit score and  delinquency relationship.   Estimated default claims: $2.7  billion. Estimated default  recoveries: $4.87 billion. Default  recovery rate 7.6 percent  without consolidation. Default  recovery rate 16.8 percent with  consolidations.  76 lenders participating (292  percent enrollment); 3 additional  lenders in process of enrolling.  Allows FSA to renegotiate the  loan consolidation contract for a  potential savings of $10 million  in fiscal year 2002.  Total collections: $3.22 billion.  Recovery rate 11.7 percent.  Combined recoveries were  $5.102 billion.  Exceeded goal by 1.5  percentage points, total  collected $4.87 billion.
Shorten procurement process for private  collection agencies. Use available  collections tools such as Treasury offsets,  administrative wage garnishments to  pursue recover defaulted loans.  Utilize available collection methods. Refer  eligible accounts to private collection  agencies for collection.  Focus on existing collection methods to  improve on past results. Provide excellent  customer service to make collections  process user-friendly.  Focus on existing collection methods to  improve on past results.
Improve default recovery  rate to new goal of $914  million.  2001: Implement the  National Directory of New  Hires database-matching  program.  2002: Expand use of the  National Directory of New  Hires (NDNH) database  to recover $200 million in  defaulted loans.
Establish procedures and a mechanism to  match collections records again Health  and Human Services database.  At close of quarter, transmit two files  (containing FSA and GA defaulted loan  data) to Health and Human Services for  comparison with NDNH files.
Collections totaled $150 million.  New information obtained for  over 690,000 accounts.  FSA collections through August:  $269 million. GA/FSA combined  collections exceeded $500  million.
Actions  Track and rank order performance based  on collection totals.
2001: Analyze the results  of IRS statistical study  regarding electronic data  match.  2002: Support the  administration’s efforts to  improve the data match  with the IRS.
Compare income data that students and  parents report on 2000-2001 FAFSAs  with income reported to the IRS for 1999  calendar year.  Work with Treasury to draft legislative  language that allows Education to  implement an effective income verification  match with the IRS. FSA will work with  IRS to test a “Consent for the IRS to  Disclose Taxpayer Information” Web site.
Perform analysis of students that have  been identified erroneously as ineligible  for funds.
2000: Continue to work  with guaranty agencies  and lenders to maintain  the quality of data in  NSLDS.  2002: Prepare annual  NSLDS analysis of  students who receive  loans although they  appear to be in default  and identify  improvements that can be  made.
Analyze loan and repayment data within  NSLDS.  Identify improvements that can be made  to NSLDS.
Outcomes  By driving private collection  agencies (PCAs) to perform  competitively, agency was able  to increase recoveries and  reduce costs.  Data helped FAFSA to identify  error-prone applicants and  minimize the amount of federal  student aid dollars that are  erroneously awarded to  students each year.  Legislative language sent to  Joint Committee on Taxation  and House and Senate  leadership. FSA and IRS  launched website on October 7,  2002. Eight postsecondary  institutions participating in pilot.  IRS agreement to permit 600  students and parents access to  website for verification of 2001  tax data.  Latest computations of NSLDS  default and other matches  indicate that FSA has averted  an amount equivalent to $300  million a year in potential  improper payments.  Reporting burden of guaranty  agencies reduced.  Not on track due to other  priorities.
Outcomes  A little over 4 million FAFSAs  filed electronically.  5,364,223 applications filed  electronically. Over 61 percent  of all electronic submissions  used Web.  7.27 million filed electronically,  5.37 million filed via the web.  Enhanced and increased the  types of FAFSA on the Web  Toolkit materials that financial  aid administrators, counselors  and other who work directly with  students and their families.
Goal  met?
Launched the COD system as  part of FSA Integration Plan,  integrating the Pell and Direct  Loan processes. Schools no  longer have to ensure valid ISIR  data is on file for direct loan  recipients.  163 program reviews  completed, seven institutions  referred to IG for  noncompliance.  Preliminary measures  developed. First calculations will  take place in fiscal year 2003.
EDA reduced mailing costs (by  $1,196,414) and provided  borrower with an efficient  method of payment.
Goal/Strategy  Description  2000: Increase the  number of Free  Application for Federal  Student Aid (FAFSAs)  filed electronically from 3  million to 4 million.  2001: Increase the  number of FAFSAs filed  electronically to 5 million  with 50 percent via Web  product.  2002:Increase the  number of FAFSAs filed  electronically 5.5 million  with 55 percent via Web  product.  Use the Common  Origination Disbursement  (COD) system to institute  eligibility check for valid  Individual Student  Information Record (ISIR)  for Direct Loan recipients.  2001: Increase program  reviews by 20 percent.  2002: Develop metrics to  demonstrate that there is  an appropriate balance  between providing  technical assistance to  schools and program  monitoring.  Increase the total  numbers of borrowers  repaying their Direct  Loans through electronic  debiting to a minimum of  400,000 borrowers.  Provide Spanish  language deferment and  forbearance requests at  DL Servicing Web site.  Educate the foreign  school community about  FSA program  requirements to reduce  noncompliance.
Actions  Increase user-friendliness of website.  Introduce features such as incremental  save to allow users to retain data input if  unable to complete all at once.  Make improvements to Web site. Increase  visibility of Web product.  Redesign web products and increase  publicity. FSA staff to work closely with  TRIO personnel and others who work with  low-income students.
Implement eligibility check that is modeled  on an existing check performed by the  Pell system for eligible applicants.
Conduct 163 on-site reviews at  institutions.  Hold discussions between the Schools  Channel and the Management  Improvement Team. Development for FY  2003 Performance Plan.
Increase the presence of electronic debit  accounts (EDA) via mailers and allowing  convenient enrollment at Web site.
Develop Spanish website utilizing a  translator from American Translators  Association.
Spanish speaking borrowers are  able to access and download  deferment and forbearance  forms in Spanish.  Training provided in first quarter  to schools in the United  Kingdom and Canada. A focus  group was formed and  developed a foreign schools  handbook. Also, conducted  several demonstrations on  electronic application to  participate in title IV programs.
Goal/Strategy  Description  Implement a pilot program  at foreign schools that  would prevent false  enrollments.
Actions  Implement pilot program that enables  foreign schools to enter enrollment data  on the Web and guaranty agencies to  verify data before loan funds are  disbursed.
Outcomes  FSA has submitted  recommendations for legislative  and regulatory changes that  would require lenders to verify  student enrollment prior to  disbursements.  Eligibility determinations for all  low-volume foreign schools  completed in February 2001,  high volume foreign institutions  recertified by May 31, 2001.
Make a determination on  initial cohort of  recertification applications  for all foreign non-medical  schools eligible to  participate in the FFEL  Program.  2000: Reduce fraudulent  death and disability cases  below 1998 baseline.  2001:Augment continuing  false death and disability  campaign.
Recertify the initial cohort of foreign  schools.
Revise forms currently in use. Pilot  centralized processing of disability claims  for four guaranty agencies. Conduct  periodic audits of NSLDS and credit  bureau information. Follow-up on  Inspector General (IG) estimates.  Implement pilot that will serve as test run  for regulations that go into effect in 2002.
Validate outcomes and disposition of the  remaining 1,300 claims identified as  “discharged.”
Implemented three actions to  strengthen initial screening  process: (1) revise forms, (2)  one-year pilot centralized  processing with four guaranty  agencies, and (3) conduct  periodic audits using both  NSLDS and credit bureau data.  Further analysis conducted on  20,817 files with income within  first year of discharge.  Pilot successfully implemented  in September 2001.  Comprehensive report on  outcomes of 1,300 discharges  issued in April 2001 and  forwarded to Inspector General.
None provided.
Conduct and complete  investigative analysis on  remaining 1300  discharges identified from  Inspector General audit.  Expand FAFSA  Correction on the Web  capabilities.  Partner with the National  Student Loan  Clearinghouse (NSLC) to  eliminate mismatches in  enrollment information.
Popularity of this new function  resulted in FSA having to  increase its server capacity.  Clearinghouse school student  enrollment data received by  Direct Loan Servicer up to 90  days earlier. Significant  reduction (25 percent) in the  percentage of in-school  deferment forms required for  completion by students.  Implemented standard  procedures at all service  centers, automated data  transfer process, improved call  rate to 95 percent, among other  activities.
Enter into a partnership with NSLC based  on successful implementation of data  exchange.
Try at least five new ways  to make debt collection  more efficient, less costly,  and more customer  service oriented.
Implement a process that will allow social  security number discrepancies to be  easily resolved. Automate data transfer  with Justice. Shorten timeframe of wage  garnishment hearings. Improve answer  call rate for Debt Collection Service.  Streamline the ability-to-benefit discharge  review process.
Goal/Strategy  Description  Increase by five, the  number of guaranty  agencies partnered with  FSA.
Goal  met?
Expand current initiatives  to help noncompliant and  reimbursement schools  prepare action plans to  improve their  management of title IV  programs.  Increase the default  recovery rate for loans in  default held by guaranty  agencies.
Develop a welcome package for new title  IV eligible schools. Establish baseline for  new schools that will be analyzed at end  of first year to provide feedback.
Outcomes  Partnerships formed with USA  Group, Texas Guaranteed  Student Loan Corporation,  Nebraska Student Loan  Program, Oklahoma Student  Loan Program, and South  Dakota EAC. Agency rankings  published for first time since  fiscal year 1996, statistical data  published through year,  increased presence of  department at industry  association meetings and  development of joint initiatives.  Reduced the percentage of  school on reimbursement and/or  cash monitoring by 30 percent.
Increase emphasis placed in on guaranty  initiatives.
Overall recovery rate: 18.13  percent, up from 15.52 percent  in previous year.
Our determination of whether or not a goal was met was based on our analysis of FSA’s internal  documents and considered the agency’s collective efforts during the period in which the goals were in  effect.
section_title: Appendix IV: Comments from the Office of Federal Student Aid
section_title: Appendix V: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contacts
section_title: Staff Acknowledgments
paragraphs: Lisa Lim and Carla Craddock made significant contributions to this report.  In addition, James Rebbe provided legal support, Carolyn Boyce provided  assistance in selecting schools for our survey, and Susan Bernstein and  Barbara W. Alsip provided writing assistance.