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GAO-03-268R 1 (2002-11-21)

handle is hein.gao/gaocrptapey0001 and id is 1 raw text is: Accountability * Integrity * Reliability United States General Accounting Office Washington, DC 20548 November 21, 2002 The Honorable Susan M. Collins Ranking Minority Member Permanent Subcommittee on Investigations Committee on Governmental Affairs United States Senate Subject: Department of Education: Guaranteed Student Loan Program Vulnerabilities Dear Senator Collins: This report responds to your request and subsequent conversations with your staff, that we investigate weaknesses in the Department of Education's administration of student loans for postsecondary education under the Federal Family Education Loan (FFEL) Program.' Specifically, you asked that the Office of Special Investigations, acting in an undercover capacity, examine weaknesses in Education's procedures for certifying foreign schools to participate in the FFEL Program and to determine whether student loans can be obtained by fictitious students purportedly attending a foreign school. We briefed your office on our investigative findings. This report summarizes those findings and includes documents we referenced in that briefing. As a result of our undercover investigation, we exposed vulnerabilities in Education's administration of the FFEL Program. With relative ease, we created Y'Hica Institute for the Visual Arts, a fictitious graduate-level foreign school purportedly located in London, England. After creating Y'Hica, we obtained certification from Education for the school to participate in the FFEL Program. Finally, we sought and obtained approval for student loans totaling $55,500 on behalf of three fictitious students purportedly attending Y'Hica. After completing our investigation, we contacted Education officials and briefed them about our findings. As set forth below, we are making recommendations aimed at preventing fictitious foreign schools from participating in the FFEL Program and preventing fictitious students from obtaining student loans. 'The FFEL program is a loan program for postsecondary students that the government supports under Title IV of the Higher Education Act. Previously, GAO identified vulnerabilities in the Guaranteed Student Loan Program. (See U.S. General Accounting Office, High-Risk Series: Guaranteed Student Loans, GAO/HR-93-2 (Washington, D.C.: December 1992), and High-Risk Series: Student Financial Aid, GAO/HR-95-10 (Washington, D.C.: February 1995). GAO-03-268R Guaranteed Student Loan Vulnerabilities

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