Perkins Student Loans

Need for Better Controls Over Loans Recovered From Closed Schools Gao ID: HRD-91-70 March 27, 1991

Pursuant to a congressional request, GAO reviewed the Department of Education's Perkins Student Loan Program, focusing on Education's policies, procedures, and practices for recovering Perkins loan fund assets from schools that go out of business.

GAO found that Education lacked: (1) adequate internal controls over Perkins fund assets obtained from closed schools; (2) adequate data and guidance for accurately determining the value of assets due from the schools; and (3) a system for calculating and reconciling the value of assets returned with the amounts due. GAO also found that: (1) Education's loan servicing backlog could increase defaults; and (2) 1990 legislative changes to the Higher Education Act could indirectly increase school closures and exacerbate the loan processing backlog.

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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