Direct Student Loans

Gao ID: HEHS-95-225R August 25, 1995

Pursuant to a congressional request, GAO reviewed year-one schools' satisfaction with the Federal Direct Student Loan Program (FDSLP), focusing on the: (1) process of reconciling schools' loan records with the Department of Education's records; (2) computer software that Education developed and provided to the schools; and (3) adequacy of the loan-servicing contractor's functions. GAO noted that: (1) the 17 schools surveyed were enthusiastic about FDSLP, particularly its effect on loan processing and borrower satisfaction; (2) all the schools surveyed were satisfied with FDSLP implementation and planned to maintain or increase their proportion of direct loans over the next year; (3) Education provided new software in April 1995 to address schools' concerns with reconciling their loan records with Education's records; (4) some schools had problems in implementing the new software, but Education, its software contractor, and its loan-servicing contractor provided prompt support services to address these problems; and (5) school officials generally found that the loan-servicing contractor was helpful in identifying the source of discrepancies between loan records and revised the software to address these problems.



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