ERIC Number: ED347941
Record Type: RIE
Publication Date: 1992-Jul-24
Reference Count: N/A
Stafford Student Loans: Prompt Payment of Origination Fees Could Reduce Costs. Report to the Chairman, Permanent Subcommittee on Investigations, Committee on Government Affairs, U.S. Senate.
General Accounting Office, Washington, DC. Div. of Human Resources.
A study was done to determine the extent of and reasons for the Department of Education's delayed receipt of origination fees for Stafford Student Loans, and actions needed to facilitate the prompt receipt of the fees. The fees help offset the federal governments' multibillion-dollar cost of subsidizing the Stafford Student Loan Programs. There have been concerns that the fees were not always promptly received or reported. The study analyzed a sample of 238 lenders and a sample of 200 Stafford loans. The loan sample provided a basis to estimate how long lenders hold origination fees from loan disbursement until the Department receives the fees, the associated interest cost, and the potential cost savings that could result from prompter payment of the fees. Results indicated that the government is incurring unnecessary interest costs associated with the collection of origination fees because it does not receive fees from some lenders, it receives them from other lenders long after they are collected from students, and the Department's collection practices discourage prompt remittances. The study suggested that the Department of Education could correct the situation by collecting fees from lenders within 15 days of loan disbursement. Included are appendixes with technical information on the study, five tables and four figures. (JB)
Descriptors: Banking, Educational Finance, Federal Government, Fees, Higher Education, Program Administration, Student Loan Programs
U.S. General Accounting Office, P.O. Box 6015, Gaithersburg, MD 20877 (first copy free; additional copies $2 each).
Publication Type: Reports - Evaluative
Education Level: N/A
Authoring Institution: General Accounting Office, Washington, DC. Div. of Human Resources.
Identifiers: Department of Education; Stafford Student Loan Program