Capital Briefs: GAO Finds Problems with Student Loan Program

Federal student lending programs are plagued by management problems, despite lawmakers' attempts to overhaul the programs, the General Accounting Office said last week.

Problems detailed in a GAO report include:

Differences between the government's direct loan program and the federally guaranteed bank loan program have created confusion in the application and repayment process.

The federal government bears too much risk for loan losses.

Loans to riskier borrowers such as low-income students attending private trade schools have increased.

Unreliable student loan data prevents the Department of Education from accurately reporting on the loan program's financial position.

The GAO praised the Department of Education for making progress in eliminating management snags, but said until the problems are "fully resolved," officials will be unable to accurately budget for programs or estimate the government's liabilities.

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