Summary: The Department of Education reported that in fiscal year 1997 it awarded more than $43 billion in financial aid to 8.1 million students. In response to concerns about unreliable data in its student loan database as well as its ability to effectively manage its student loan programs, the Department developed the National Student Loan Data System. The system has three main goals: improving the quality and accessibility of student financial aid data, reducing the burden of administering the Department's student financial aid programs, and minimizing fraud and abuse in these programs. The Department intended for the system to be used by schools, lenders, third-party servicers, and guaranty agencies to help determine student eligibility for aid, identify borrowers' loan status, update student information, and serve as an overall financial aid history file on program participants. As of February 1997, the Department required all schools to use the system to report, confirm, and update the enrollment dates and the status of borrowers--key information in determining student eligibility for federal aid. However, in July 1997, GAO found that several schools it visited chose to use paper transcripts to obtain student financial aid histories because they considered the system's electronic data unreliable. This report discusses (1) the extent to and the purposes for which schools are using the system, (2) any problems these schools are having and the benefits they are getting from using the system, (3) why some schools are not using the system, and (4) the extent to which the Department is taking or plans to take steps to help ensure that schools are fully using the system.
