Student Financial Aid

Although continuing to confront billions of dollars in annual payments for defaulted student loans, the Education Department has not effectively used available student aid data to enforce compliance with federal requirements. For example, in fiscal years 1982 through 1992, Department data indicate that about 43,500 ineligible students received more than 58,000 loans totaling $138 million. Other data indicate that students may have received loans in excess of their cost of attendance. Further, the Department has not effectively used other data to identify students who received (1) grants while attending two or more schools concurrently or (2) additional financial aid despite being ineligible because they had defaulted on previous loans. For award years 1989 to 1993, Pell Grant Program data showed that more than 48,000 students may have received Pell Grant overpayments and more than 35,000 students may have inappropriately received grants while attending two or more schools concurrently. More than 100,000 students who had loans and later became ineligible for additional aid may have received nearly 40,000 Pell grants totaling $200 million. Although the Department has taken steps to strengthen program controls and systems used to administer its student financial aid programs, while minimizing loan defaults and programs abuse, program weaknesses persist. For example, data matches have not prevented ineligible students from getting additional aid. Further, the Department's reliance on schools to ensure compliance with program requirements also needs to be strengthened. GAO summarized this report in testimony before Congress; see: Student Financial Aid: Data Not Fully Utilized to Identify Inappropriately Awarded Loans and Grants, by Cornelia Blanchette, Associate Director for Education and Employment Issues, before the Permanent Subcommittee on Investigations, Senate Committee on Governmental Affairs. GAO/T-HEHS-95-199, July 12 (19 pages).

GAO found that: (1) although faced with billions of dollars in annual payments for defaulted student loans, the Department of Education has not effectively used available student aid data to comply with federal requirements; (2) between 1982 and 1992, 43,519 ineligible students received 58,105 loans, totalling over $138 million; (3) many students may have received loans exceeding their cost of attendance because Education has not kept sufficient cost information; (4) Education has not fully used financial aid data to identify students who received grants while attending two or more schools concurrently or additional financial aid despite being ineligible for defaulting on previous loans; (5) between 1989 and 1993, over 48,000 students may have received Pell Grant overpayments and over 35,000 students may have improperly received grants while attending two or more schools concurrently; (6) over 101,000 students who became ineligible for additional aid may have received Pell Grants totalling about $200 million; (7) although Education has recently made improvements to its student loan and grant systems to identify student loan ineligibility, it is too early to determine the effectiveness of these new systems; and (8) the system controls in place to prevent students who previously defaulted on loans from obtaining additional aid are not sufficiently aimed at prevention.

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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