Student Financial Aid

The Department of Education reported that in fiscal year 1997 it awarded more than $43 billion in financial aid to 8.1 million students. In response to concerns about unreliable data in its student loan database as well as its ability to effectively manage its student loan programs, the Department developed the National Student Loan Data System. The system has three main goals: improving the quality and accessibility of student financial aid data, reducing the burden of administering the Department's student financial aid programs, and minimizing fraud and abuse in these programs. The Department intended for the system to be used by schools, lenders, third-party servicers, and guaranty agencies to help determine student eligibility for aid, identify borrowers' loan status, update student information, and serve as an overall financial aid history file on program participants. As of February 1997, the Department required all schools to use the system to report, confirm, and update the enrollment dates and the status of borrowers--key information in determining student eligibility for federal aid. However, in July 1997, GAO found that several schools it visited chose to use paper transcripts to obtain student financial aid histories because they considered the system's electronic data unreliable. This report discusses (1) the extent to and the purposes for which schools are using the system, (2) any problems these schools are having and the benefits they are getting from using the system, (3) why some schools are not using the system, and (4) the extent to which the Department is taking or plans to take steps to help ensure that schools are fully using the system.

GAO noted that: (1) postsecondary schools participating in federal student financial aid programs are making limited use of NSLDS' online and batch processing functions; (2) GAO estimated that almost half of the schools are not using these system capabilities at all--3 years after they first became available; (3) those that are using these functions are not routinely using them for many of the tasks they are capable of performing; (4) the one use made by the majority of schools is to provide and update student financial data on the student status confirmation report, which the Department now requires all schools to perform; (5) GAO estimated that over half of the schools rarely or never performed 7 of the 10 tasks that GAO identified for its survey using NSLDS' online and batch processing functions; (6) in general, schools' experiences using NSLDS have been relatively problem free; however, some schools did experience problems with some aspects of the system; (7) schools using NSLDS' online and batch processing functions had mixed views on whether they led to improvements in their program administration; (8) schools that did not use NSLDS' online and batch processing functions cited a variety of reasons for not doing so; (9) the most frequent reasons cited by these schools included relying on alternative methods to obtain or submit data needed to administer student aid programs; (10) of the schools that did not use the systems' online and batch processing functions, many did not have plans to obtain access to NSLDS, had plans to obtain access to the system but did not know when, or were unsure when they would obtain access to the system in the future; (11) in an effort to increase schools' use of NSLDS, the Department has provided training assistance to schools and has worked to ensure the accuracy of the system's data; (12) the Department recently expanded its NSLDS customer service center and will offer NSLDS training to users at its 11 regional training centers; (13) in addition, to demonstrate its commitment to improving the reliability of data on its postsecondary education programs, the Department has addressed the issue of data integrity in its long-range strategic and annual performance plans prepared in response to the Government Performance and Results Act of 1993; (14) as part of this commitment, the Department has initiated efforts to identify and correct inaccurate data in NSLDS, and to strengthen its working relationships with other data providers, such as guaranty agencies.