Summary: GAO discussed ways in which Federal agencies could improve their collection of debts owed to the Government. Debts arise from a number of Federal activities, including tax assessments, sales of Government services and goods, overpayments to veterans and annuitants, and various loan programs such as student and housing loans. Most of these debts are paid routinely; however, some are not, and amounts owed and being written off as uncollectible are substantial and growing rapidly. In general, there are two reasons why debt collection in the Federal Government has not kept pace with the increasing number of debts: (1) debt collection has generally been afforded a low priority with emphasis on disbursing funds rather than collecting them; and (2) present Government collection methods are expensive, slow, and ineffective when compared to commercial practices. Unless Federal agencies are provided with essential collection tools and resources and until they actively pursue the collection of debts, hundreds of millions of dollars will continue to be needlessly lost. Comprehensive debt collection legislation presently before Congress would give agencies many of the tools they need. Tools such as adequate accounting, billing, and collection systems that work and provide management with the information needed to protect the Government's financial interest are essential. The charging of interest is already required by Federal regulations as a payment incentive; however, many major agencies have not been complying. If Federal agencies reported debts owed to the Government to the credit bureau network, debtors would be more likely to pay their debts to the Government to avoid receiving poor credit ratings. Private collection firms could also be used to reduce the amount of uncollected debt. Another way of collecting delinquent debts would be for the Government to reduce or withhold future payments, benefits, or tax refunds from the debtor. Previously, GAO has found that the lack of strong and effective standards and procedures for screening and approving credit by Federal agencies has not only contributed to delinquencies and defaults, but has also hindered collection efforts. The debt owed to the Government has been growing, but GAO believes that collection goals are achievable if the Government commits itself to the collection effort and if the comprehensive debt collection legislation is enacted.
