Supplemental Student Loans

Pursuant to a congressional request, GAO provided information on the Supplemental Loans for Students (SLS) Program, focusing on the: (1) volume of loans made to students attending postsecondary and proprietary schools; (2) extent to which freshman students borrowed as opposed to other students; and (3) value of SLS defaulted loans.

GAO found that: (1) during the last 3 years, SLS loans have totalled over $3.2 billion; (2) loan volume went from $564 million in 1987 to $1.347 million in 1988, and dropped to $1.294 billion in 1989; (3) loans to freshmen borrowers increased from 40 percent in 1987 to about 63 percent in 1989, while loans to proprietary school borrowers increased from 55 percent to about 60 percent; (4) during the last 3 years, students defaulted on $310.6 million in SLS loans; (5) loan defaults increased from $14 million in 1987 to about $247 million in 1989; (6) loan defaults from freshman borrowers increased from 12 percent to 85 percent of all loans, while defaults from proprietary school borrowers increased from 12 percent to 86 percent of SLS loan defaults; (7) during the 3-year period, 419,434 student borrowers received only SLS loans, while 673,458 received both SLS and Stafford loans; (8) the number of students receiving only an SLS loan increased from 94,870 to 128,318, while the number receiving both kinds of loans increased from 93,217 to 328,448; and (9) almost 70 percent of the students receiving both kinds of loans in 1989 were freshmen, and 90 percent of those attended proprietary schools.