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DOCOUENT 3ISURE
01903 - [A10920883
[Guaranteed Student Loan Program BankruptcJ.s]. HRD-77-83;
HBD-77-8J; B-164031(1). 1pril 15, 1977. Rcleased April 15, 1977.
9 pp. + 3 enclosures (3 pp.).
Report to Rep. Don Edwards, Chairman, House Committee on the
Judiciary: Civil and Co nstitutional Rights Subccmittee; Rep.
William Ford, Chairman, House Committee on Education and Labor:
Postsecondary Education Subcommittee; by Robert P. Keller,
Acting Couptrcller General.
Issue Area: Education, Training, and Employment Programs (1100).
Contact: Human Resources and Development Div.
Budget Function: Education, Manpower, and Social Services:
Higher Education (502).
Organizaticn Concerned: Department of Health, Education, and
Welfare; office cf Education.
Congressio~nal Relevance: House Committee on the Judiciary: Civil
and Constitutional Rights Subcceuittee; House Committee on
Educacion and Labor: Postsecondary Educatlca Subcommittee.
Authority: Higher Education Act of 1965, title 1U, as amended.
Education Amendmetts of 1976.
Under the Guaranteed Student Loan program, loans are
sale to students by participating ;rivate lenders. These loans
are insured by tL? U.S. Office of Education or by State or
private nouprofit guarantee agencies which have reinsurance
agreements with the Cffice. The Federal Government pays 100% of
lender losses on default and bankruptcy claims on Office of
Education insured lcans, and reimburses State or nonprofit
agenc.es for 90% o5 their payrents to lenders. A random sample
of 606 bankruptcy claims paid during the period July 1, 1975,
through June 30, 1976, was studied. Findings/Conclusions:
Analysis of 541 of tbese cases showed the petitioners to havoi:
average earnings of $6,678 for the year prior to filing
bankruptcy; average total debts of S14,115, of which $R,13P were
educational debts; and average assets of 84,454. The average
guaranteed student loan was for $2,588, and the average claim
paid to lenders was 52,292, indicating that little is being
repaid on these loans. Other Federal and private loans averaging
about $1,600 were included in the bnkruptcy petitions. About 8%
of the bankruptcy petitions listed educational loans as the only
indebtedness. Over 31 of those filing were still ir school.
About 35% of the individuals hAd educational debts which
represented 60% ur mre of tie total unsecured debts. (SC)](ViewImageLocal?handle=hein.gao/gaobaacdj0001&div=1&collection=&method=preview&ext=.png&size=3)