A series of recommendations is presented for reducing default rates in the Guaranteed Student Loan (GSL) program. First, a summary is provided of trends toward the increasing dependence of students on loans to finance their college education and the large and growing default rate among borrowers. Next, four issues are discussed: Should lenders bear greater responsibility for the GSL default problem? Should educational institutions be held accountable for the default rates of their students? Should educational institutions be given a role in deciding who can borrow? And, are there alternatives for providing aid to some high-risk students? Following analyses of these issues, recommendations and proposals are put forth, calling for: (1) the assignment of increased accountability to GSL lenders by requiring, for example, lenders to perform pre-loan counseling related to the cost of borrowing, repayment obligations, and the consequences of defaulting on a loan; (2) increasing the authority of colleges to determine whether students should be permitted to enter into a loan agreement by authorizing them to assign a risk-factor rating to applicants and allowing them greater discretion in certifying loan applications; and (3) increasing the effectiveness of work-study programs as an alternative to loans for low-income students. The recommendations of the Financial Aid Policy Task Force are appended. (AJL)