Stafford Student Loans

Millions of Dollars in Loans Awarded to Ineligible Borrowers Gao ID: IMTEC-91-7 December 12, 1990

Pursuant to a congressional request, GAO evaluated the Department of Education's database on Stafford student loans and how Education could use such data to prevent loan abuses.

GAO found that: (1) about 32,000 students who had defaulted on loans totalling over $54 million later received new loans worth over $109 million; (2) Education may have made up to $5 million in loans to students in excess of the annual limit from September 1987 through August 1988, costing the federal government additional interest subsidies; (3) although data indicated that student loans exceeding federal limits had not yet become a significant problem, such abuse could continue and become worse if left unchecked; (4) Education's automated systems did not allow guaranty agencies to access the database on Stafford loans; and (5) inadequate monitoring and maintenance of Education's database made it difficult to determine the extent of abuse, since files had suspect or missing data.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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