Direct Student Loans

Selected Characteristics of Participating Schools Gao ID: T-HEHS-95-123 March 30, 1995

Federal student loan programs have provided billions of dollars in financial aid to postsecondary education students during the past 25 years, but problems have continually plagued the programs. For example, the guaranteed student loan program has experienced high student loan defaults and lacks the accurate and timely information required for sound management decisions. These problems are attributed to a complex and costly program structure involving thousands of lenders, guaranty agencies, and other participants. To overcome these problems, Congress created the direct student loan program. In the program's first year, 102 postsecondary schools were participating, representing five percent of fiscal year 1991 student loan volume. Participating schools are very satisfied with the Education Department's implementation of the direct loan program. For schools selected for the program's second year, as of March 1995 the aggregate loan volume is short of that year's 40-percent goal. Part of this shortfall may be due to uncertainty about the future of the direct loan program.

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