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HEHS-96-81R 1 (1996-03-11)

handle is hein.gao/gaobaclce0001 and id is 1 raw text is: GAO United States GAOl General Accounting Office Washington, D.C. 20548 Health, Education and Human Services Division B-270915 March 11, 1996 The Honorable Nancy Landon Kassebaum Chairman, Committee on Labor and Human Resources United States Senate The Honorable William F. Goodling Chairman, Committee on Economic and Educational Opportunities House of Representatives The Federal Family Education Loan Program (FFELP), formerly known as the Guaranteed and the Stafford Student Loan programs, provides eligible students access to money for postsecondary education. The guaranty agencies are designated state or private not-for-profit entities that help administer FFELP by, for example, reimbursing lenders if borrowers fail to repay their loans. These agencies' reserves are federal funds that represent the amount by which their sources of funds have exceeded their use of funds since the beginning of agency operations. In earlier reports, we concluded that in aggregate these agencies have more reserves than they need and suggested how reserves in excess of agency needs could be recovered.' Subsequently, in accord with provisions of the Omnibus Budget Reconciliation Act of 1987, the Department recovered some of these agencies' reserves. The Higher Education Amendments of 1992 set a minimum reserve standard of 1.1 percent of each guaranty agency's outstanding student loan guarantees. Subsequently, Department of Education regulations provided authority for it to recover agency reserves in excess of 2 percent of outstanding loan guarantees under certain circumstances. As of September 30, 1994, guaranty agencies administering FFELP student loans held about $1.6 billion in federal cash 'See, for example, Guaranteed Student Loans: Guidelines for ReducinQ Guaranty Aaency Reserves (GAO/HRD-86-129BR, Aug. 7, 1986). GAO/HEHS-96-81R Guaranty Agency Finances

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