High-Risk Series

In 1990, GAO began a special effort to identify federal programs at high risk for waste, fraud, abuse, and mismanagement. GAO issued a series of reports in December 1992 on the fundamental causes of the problems in the high-risk areas; it followed up on the status of these areas in February 1995. This, GAO's third series of high-risk reports, revisits these troubled government programs and designates five additional areas as high-risk (defense infrastructure, information security, the year 2000 problem, supplemental security income, and the 2000 decennial census), bringing to 25 the number of high-risk programs on GAO's list. The high-risk series includes an overview, a quick reference guide, and 12 individual reports. The high-risk series may be ordered as a full set, a two-volume package including the overview and the quick reference guide, or as 12 separate reports describing in detail these vulnerable government programs. GAO summarized the high-risk series in testimony before Congress (GAO/T-HR-97-22).

GAO found that: (1) in fiscal year 1995, the federal government paid over $2.5 billion to make good its guarantee on defaulted student loans; (2) in addition, inadequate Department oversight has contributed to abuses on the part of some schools participating in federal student aid programs; (3) Congress addressed many of these problems through amendments in 1992 and 1993 to title IV of the Higher Education Act of 1965; (4) the Department has acted to address these problems and their causes; however, these actions have not completely resolved the underlying problems; (5) partly to help strengthen the Department's internal controls, the 1992 and 1993 amendments: (a) required that financial and compliance audits of guaranty agencies be conducted annually rather than every 2 years; and (b) required that lenders and guaranty agencies share more of the risk of defaults in FFELP by reducing the maximum insurance and reimbursement rates on a defaulted loan from 100 to 98 percent; (6) the Department has generally tried to address problems in its student aid programs, and some of these efforts appear to be achieving some results; (7) in July 1996, the Department had completed actions or had actions in progress or planned to address 186 of 205 recommendations, most made over a 4-year period by the Department's Office of Inspector General and GAO, to improve its management of federal student financial aid; (8) although the Department has shown a commitment to improving its oversight and management of the student aid programs, the financial risk to U.S. taxpayers remains substantial; (9) the procedural and structural program elements that are the root causes of the problems remain; (10) some of these problems arose from the statutory design of the programs and will persist unless changed through congressional action; (11) although the Department can mitigate some of these problems through more effective oversight and management, many of the Department's initiatives have not been fully implemented; (12) progress toward their full implementation has been mixed; (13) the student aid programs employ complex and cumbersome processes with many participants; (14) each major program has its own procedures and set of participants; (15) management shortcomings are a major problem, although in some areas, the Department has improved some its practices; and (16) the Department has begun planning a major reengineering effort that it expects will resolve these problems in the next several years.