Vulnerabilities in the Stafford Student Loan Program

Gao ID: T-HRD-91-33 May 29, 1991

GAO discussed ways to improve the structure and administration of the Department of Education's Stafford Student Loan Program. GAO believes that Education needs to: (1) do a better job of approving and monitoring eligible schools; (2) expedite the development of its new student loan data systems designed to screen out ineligible students before they receive guaranteed loans; (3) provide better incentives for lenders and guaranty agencies to assume responsibility for preventing loan defaults; and (4) require guaranty agencies to maintain adequate reserves and avoid conflicts of interest.

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