A r c h i v e d  I n f o r m a t i o n

FY 1999 Annual Plan - Volume 1. Objective Performance Plans and Data Quality - February 27, 1998

Objective 3.3. Postsecondary student aid delivery and program management is efficient, financially sound, and customer-responsive.

Context: The Department of Education works with 6,000 postsecondary institutions, 4,800 lenders, and 36 guaranty agencies to deliver nearly $51 billion in grant, loan, and work-study assistance to almost 9 million students who rely on federal student aid to pay for college. The Department is ultimately responsible for the collection of more than $150 billion in outstanding loans, and its data systems track 93 million student loans and 15 million Pell Grants.

Key strategies for FY 1999

The Department is requesting almost $568 million in mandatory and discretionary funds, or about 60 percent of its total administrative budget, to manage the federal postsecondary student aid programs. This amount includes, for example, $220 million to administer Direct Loans, $80 million for student aid delivery (including processing applications, determining student eligibility, and transferring data and funds between the Department and 6,000 participating postsecondary institutions), and $27 million for the National Student Loan Data System (which is used to prevent disbursements to students who have previously defaulted on their student loans). The Department also devotes about 367 full-time equivalent employees to ensuring the eligibility of postsecondary institutions participating in federal student aid programs.

The Administration's FY 1999 President's Budget identified the modernization of the student aid delivery system as one of its 22 highest priority management objectives. Following are the Department's key modernization strategies and initiatives.

In addition to these specific strategies, the Department will work towards converting the Office of Student Financial Assistance Programs to a performance-based organization and aligning policy initiatives to support Student Financial Aid Programs modernization efforts.


Programs supporting this objective

See programs listed for Objective 3.2.

Selected performance indicators and charts

The performance indicators included in the Strategic Plan for objective 3.3 consist of a number of measures designed to assess the Department's progress in improving the delivery of student aid including default rates, customer satisfaction levels, audit results, institutional compliance rates, and contract performance.

The cohort default rates--the percentage of borrowers leaving school who default within two years--for the Federal Family Education Loan and Direct Loan programs, will decline to a level of 10% or less by 2002. (Goal 3, indicator 16)

Indicator background and context. Although default rates have been declining sharply from very high levels over the past several years, future reductions are likely to be steady but smaller because of the large number of high default schools that have already been eliminated from the program.

Progress in reducing the default rate should continue, however, as institutional oversight initiatives are implemented and as borrowers become better informed about the high cost of default and about alternative loan repayment plans.

Data source. Office of Postsecondary Education (OPE) data, annual.

The annual number of students and families submitting or renewing their student aid applications electronically will continue to increase each year, almost doubling to 3 million by October, 2001. (Goal 3, indicator 10)

Indicator background and context. Electronic filing of student aid applications increases the accuracy and timeliness of data received by the Department and results in quicker student aid approvals for the student. This will further the goals of the EASI project and will increase customer satisfaction.

Data source. Office of Postsecondary Education (OPE) program data, annual.

Verification/validation of performance measures: Independent customer satisfaction surveys are conducted by the Planning and Evaluation Service. A major expected outcome of modernizing the student aid delivery system will be improvements in data timeliness and accuracy. Data matches with the Internal Revenue Service and other agencies help ensure data accuracy as will periodic validation evaluations of the National Student Loan Data System.


[Objective 3.2] [Table of Contents] [Objective 3.4]