Education Programs: Major Issues Affecting Postsecondary Education, School-to-Work, and Youth Employment Programs

Published by the Government Accountability Office on 1997-09-15.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

       unitea states
s;A8   GenexdAccomthgOfIice
       Washington,   D.C. 20548                                                :

       Heath,      ~NMSO~      and


        septernber 15,199?
       The Honorable Bill Fkist
             . Education Task Force
        Subject:     Educaiion Pro-     Maior IssuesAffecting PoStSeCOndZY
                     @hoobto-%brk. and’ypath &nDlOvmentPrograms

       This korrespondence provides iufonnation requestedby the committee’s
       Education Task Force on July 18,1997,smnu&&g work we have completed
       from 1990through 1997on pos@econdaryeducalion, school-@-work, and youth
       employment traMng issues. In addition today we are separat&y report&g on
       prepara;tory education issues1 Thesemat&a& may be useful as the ComnWee
       continues to explore problems in the American education Mrastructure and in
       Mfonningthefederalgovemm ent about its role in address& them

       OlMning a postsecondaq educationis becoming even more essential to
       students’future earning power, while the cost of a postsecondaryeducation is
       rising rapidly, contributing to the diffk&y of students affording a
       postsecondazyeducation. In addition, some federal programs designed to h@
       educationally and economically disdvanm        youth enter, stay in, and
       complete their postsecondaryeducation or noncollege-boundyouth obtain
       aNemathworksMRshmenotEveduptotheirexpecMions.                   Thelimited
       efkWeness of these programs has contributed to the dif6culty of some at-risk
       youth obtain&g a postsecondaryeducation.

       In &?itio~ the Department of Education the principal federal manager of most
       of these progmms, has had problems in implement       and m         student

       Education PrQgmms                                                and Secondazv
       E&xz&ion Programs
                                            GAm97912B      P ostsecOnborg Edllcatim   Prcwhcts

financialaidprograms,asweUasmanaghgtheprograxus. Thishasledusto
identify its student &ancial aid programs as high risk because of vulnerabilities
to waste, fraud, abuse,and m&management

In our past work, we have not only &cussed problems that kept some of these
programs from meeting their statutom objectives, but also identiCed ways to
improve the programs. We discuss some of these problems, as well as
congressionaland agencyactions to address them, in enclosure I.
Enclosure I id-es      and orgarhs the mqjor issues concerning our previous
work on postsecondaryeducation, school-&work, and youth employmeut
tmining programs. For each issue, we have summarized our work, including
major conclusions and recommendations,and the action taken by the Congress
or agencies. A list of relevant u@or GAO products appears in enclosure IL

We are sending copies of this correspondenceto the chairman and Ranking
Minority Member of the Commit& on the EMgeh the secretaries of Education
and Labor, other congressionalcommittees, and others who l~~aybe inMested.
please call me at (202) 612-7014.I@jor contributors include Jay Eglin, Ass&ant
Director, and Chuck Shexvey.

Carlotta C. Joyner
Director, Education and
 Employment Issues

2                                 GAWEEES97-212B    PaetecondaryEduat3onPmdmts
ENcLosuREI                                                         ENCLOSURE1


Higher education is a growing Ame&!an indus&y with $173 billion in total
expenditures and 2.6 million employeesin the 1993-94academic year. During
the 199495 academic year, more than 9,9002-year and 4year colleges and
vocalional and technical schools offered postsecondary education. Federal
appropriation9 for n@or postsecondaryeducation programs totaled about $9.4
bilLion for Cal year 1997,and the adminissation requested about $13.9 billion
for fiscal year 1993 (see endl I@.

In the fall of 1994,America%higher education system enrolled 16.1 million
students, in&xiing 456,000foreign students, and its schools conferred 2.2
miRion asso&& bachelor’s,master’s, doctoral, and professional degrees. From
1974to 1995,the portion of high school gMuates who attended a
posBecondaxyinstit&onrose&om48toneariy62percen~              Inaddition,
emrolimentincreased for nonkaditional students, such as old= students and
those attending school part time The portion of the po&secondary education
@pulation with one or more of these nontraditional characteristics increased

Since 1930,a student’s ability to afford to attend college has declined as college
tuitions have xisen faster than incomes, gxant aid,2 and state funding for public
dleges. In 1996,we reported that t&ion and fees at 4-year public colleges
increased 234 percent during the l&year period ending with school year 1994
95; median household incomes and the consumer price index rose by 82 percent
and 74 percent, respe&&y, during the same period.’ (See fig. Ll.)

?%ant aid can be fkom federal or other sources. Federal Pell grants, which
represent the largest amount of federal funds appropriated for student financial
                                            Than Household Income and
                                      164,Aug. l&1996).
3                                 GA--97-212R       Por&econd~   Education   Pmdncte
    ENcLota.RE I                                                                             ENcL0suIa1
         x Ll:                                                                        hold lncorn
                        Prices. School Years 1980-81to 199596                -




  YSQ -

  loo     -

        ifm    lsel     19g   1m   1981   1905   1986    1967   1986   lms   1990   1991   1992   ls93   1991   19%

        Since 1987at 4year public colleges and unhrsities, the mix of fell grants and
        federal student loans’has shifted iTom 67 percent loans and 33 percent grants
        to 85 percent loans and 15 percent grants in 1996,as shown in figure I.2.

         yrt\e two largest federal student loan programs are the Fedsal Family
         Education Loan Rogram (FF’EW} (the govemment guarantees loans provided
         by private- sector lenders) and the Federal Direct Loan Rogram (EDLP) @he
         government makes loans directly to porrowers>.
         4                                              GAOAEES-9%212B       Posbccondvg      Edawstion Psoducta
ENCLOSURE I                                                         ENCLOSURE1            .
~qm    1.2: Distribution
                       of Pell Grants and Fed&       Student hns     to Studen@at
4-Y&r Public Colleees and Universities

As college tuition and fees continue to increase, more students and the&
families are borrowing. The total volume of new federal student loans more
than doubled between 1987 and 1995,Kohl $9.7 billion to $23.1billion-

The growth of the higher education industry has not been without its problems.
Socioeconomically and eduaonally dhdvantaged high school students fhn
low-income families and certain ethic groups attend and complete college at
much lower rates than other students. Concernsalso exist about the Quality of
college education being provided and the managementof higher education
pmgrams and funds by the Depar&mentof Education, schools, lenders, loan
guaranty agencies, and loan servicing companies. These are the key issues that
xtUst be addressed if the United States is to remain i,ntexnationallycompetitme
 and the predominant world source of a quality college education in the fut~~.
 The following discusion involves Eve xn@or themes einmrhg access, in-

 5                                 GAWEEHS-97.212E     Postauo ndary EdnaSiom   prod=ta
    ENcLosuRE I                                                          ENCLOSUREI
    retention, improving quality, increasing affordability, and improving !inancial aid
    program managementand oxmight
    Ensuring Access

    A primary objective of federal postsecondaryeducation progmms is to ensure
    access for qualified students. Although the rate of college enrollment among
    enrollment exists among certain racial groups and income levels. For example,
    in 1993,67 percent of high sqhool gmdmtes were em&d in postsecondary
    educations However, white students enrolled at a higher rate (69 percent) than
    black students (56 percent), and students from higher income families enrolled
    at a higher rate (86 percent) than those from lower income families (45
    Thus, to narrow the enrollment gaps for students in these ra&l and income                 \
    groups, it is necesmy to encourage and help students Born minority and low-
    college or to Snd a better way to help less prepared students &om minority and
    lower income families to enroll in postsecondaryeducations

    Generally, the federal government has addressedcollege accessthrough an
    axray of student financial aid programs. The availability of federal grant,
    student loan, work study, and naiional semice financiaI aid allows eligible
    students from all income levels the opportunity to pursue a postsecondary
    education. Even students who have not obtained a high school diploma (or
    equivalent) may quali@for federal student aid if they can demonstrate an ability

    Cextain federal student aid programs are designedto help selected populations,
    higher education. Examples include the TRIO and SupplemenW Educational
    Opportunity Grant (SEOG) programs. TRIO is a series of programs that
    provides remedial and support servicesto dMMu@ged undergraduate
    students before and after they are enrolled in college. -A po&secondazy
    education instbtion’s most dedy students receive SEOGS Thesegmnfsare
    distributed &st as supplementalaid to students who receive Pelt grants, and

    Our past work has addresseda se&s of topics on coJlegeaccess. Tikis work
    includes a 1992report in which we concluded that interest subsidy payments to

    6                                  GAMU3HS-9%tl2B    P 4StSOCOllw   Edaeation   bJdUCt3
ENCLUSUREI~                                                        ENcLOsuREI
lenders on the guaranteedstudent loans they make or hold could be reduced to
s2mthegovernm ent money, yet allow student access. pVe’ako reported on the
related to Americas        and the controls in place at the Department of
Education to prevent student financial aid payments to ineligible noncitizns~
In 1991we reported, for example,that most SEOGfunds go to the intended
recipients.8 However, we also found that the amount of SEOG funds that
students receive may dependmore on which schools they attend, rather than on
theirfinancialneeds. Thisismo&yduetothe~ySEOGfundsaredistributed
among the nation%schook Schoolsannuallyreceive SEOG funds largei: xi
not ne          reflect the relatk need of the students they curren@ enrolL
We suggestedthat the Cmgress consider amendingthe Higher Ekiucation Act of
l.966, as amended,to more equitab4   distribute SEOGfunds. No such action
In 1992,we analyzd the poten& impact of lowexing the federal subsidy paid
to commercial lenders who make or hold &uaranteedstudent loans@ The
Congresswas expIoring al&math ways to cut student aid costs without
&7exMyaf&lingstudent@accesstoloancapitaL             Somewereconcemedthat
reducing the federal subsidy rate would lead to a din&i&ted supply of
guaranteedloans from commercial lenders. Our ana?y& showed that the
necesary to retain most lenders in the program. We recommendedthat the

       Educatlom Infoxmation on Minor&-Ta~eted Scholars&q (G2iO/HEHS
9417, Jan 14 1994).

                                     5-222,Aug. 29,1995).
                     Verification Helns Preven Student Aid Pavments to
Inelis!ibIe Noncitizens (GAO/EBHS97-153,   A$6,1991).

@SlMoti Student Loans. Lower Subs&v am             ts Could Achieve Savimzs
             . Act!esg
without A,&!mm         (GAO&-7Jin~                  1992).

7                                    GA--97-212E     p4J6mson*   Eduution   pradoets
ENcL-osuREI                                                         ENCLOSURE1
subsidy rate be reduced to 3.0 percent. Subsequently, the Congress reduced the
subsidyrateto2.5percen~sa;vingthegwernm ent about $165 million without
affecting students’accessto loans or enrollment in school.
Raising Retention

About one-third of college freshmen drop out before they begin their second
year, and only about half eventually gmdmte. College students’abiliw to stay
in school (referred to as persistence) through graduation varies considerably
depending on their high school grades, Scholastic Aptitude Test scores, f&m&
income, and ethnicity. Collegesalso vary greatly in retaining studenk For
example, schoolsthat have highly selective admission standards (accept
had an averagef                          persistence rate of 90.7 percent in 1997.
In contra& schoolswith opendmMons standards (accept an high school
percent in 1997.
Persktence inpos&econdary
                     .        educalionis important for several reasons. From
a student’s m           ,thosewhopeMstthroughgraduaUongreatlyincrease
their lifetime eamingspotdial. In 1994,a college graduate eamed 73 percent
niore per hour than someonewith a high school diplo-        On the other hand,
students who dropped out of college may have done little to improve their
earnin@ potentid Yet students who dropped out may have incurred additional
Gnancialliabilities from student loan debt and are more Ukely to default on
their student loans. A student’s faihxe to persist therefore, can be costly not
0114for the student,but also to the government and for society as a whole.

Federal student aid programsmay help many students stay in-college who
might hm otherwise dropped out for financial reasons. In addition one
component of the TRIO pro-dent            Support Services-provides funding
to higher educationinH&utions to help them improve their retention and
graduation rates for low-income students or those with disabilities. fn.1998, the
Department is requestingabout $169.9million to help app-              179,500
participants. This program, however, can help only a small portion of students
who might benefit from such a&stance.
Partly becauseof the rather few federal dollars dkected to helping students
persist in college,we have done little work on student retention We have
reviewed the combinationof federal student aid grants and loans provided to
students and the restructuring of student# financial aid packages to help
improve the paistence rates of minority and low-income students For

8                                 GAWBEBS-97-212R   pastaeeondug   Edllution   produca3
ENCLO~I                                                           ENcLosuREI
example, our 1995 analysis of low-income students showed that a 81,000
increase in grant aid reduced the probability that a low+ncome student would
siguificzutt effect on these students’per&tence.lo In @Won, giving students
subsequentyears (refemd to as &&loading grants) could sign&antIy reduce
the dropout rate, according to our work.

Although the Department of Education thought that frontioading held prom@
it said it may need specific legislaM! authoxiw before considering a
&onWadingpilotprogram         TheCongreshasyettogivetheDepax4mentthat
In additiol& federal financial aid programs can help students enroned in dlege
who need remedial education. For example, we report& that 13 permt of aid
one remedial cousxU

Eelping to ensure that poslsondary institMons provide students with qgality
education   or t&ning worth the lime, energy, and money they invest has
traditionally been a responsib%ty shared by school accreditation agencieq the
states, and the Department of Education. Ekcause school operations, curricula,
and instrucfion are state and school respon&biEtiesrather than federal ones,
the Department relies on accMi&g agenciesand states to determine and
enforce standards of program Qualitg. The Departmeng as specified in the
Eigher Education Act of 1965,as amended,(1) approves inclivi~ accrediWg
agencies as the reliable authoxitiesto help ensure that schools prcrviae quality
     . . and tmining and (2) certifies schools by focusing more on their
B                and financial capabilities and soundnessrather than evaluating
the ipality of the education they pzWde.

Since the late 198Oqthe Congressand the pos&econdary education community
(prbate for-profit schools) sector. Although proprietary schools make ain

                                           Aid Could Reduce kw-Income
*dent    FWancial Aid: Federal m Awarded to Students Taking -echaI .
Courses (GAOEIEHS-97-142,Aug.?:, 1997).

9                                 GAOIHEHS-9%212E   Pomseconm   Eduution   Pmda~cta
mcLosuRE1                                                             ENcxBuREI
important contribution to the nation’s economic competitiveness by providing
occupational tmining to those who are not college bourld, some proprietary
school operatorshave enliched t-h-           at the expense of economically
t%sadvmtagedstudents,while providing little or no education in return. Faced
with large debts and no new marketable skills, these students often default on
their loans. Default rates for proprietary school students peaked at around 41
percent in 1990,when the student loan default rate for all pos@econdaIy
institutions meraged about 22 percent. In 1991,the government paid lenders
$3.2 billion to cover loan defaults-more than triple the amount paid in 1987.
Because of the large number of loan defaults and our work and that of
Education’s Of&e of Inspector General (OIG), the Congress and the
Department have taken several actions to address this problem. For example,
the Higher EducationArnenhene of 1992 addressed program integrity
concerns by including provisions to encourage the states to more aclhely
oversee schools,and the Student Loan Default Prevention Miative Act of 1990
allowed the Departmentto begin barring postsecondarg schools with
exceptionally high default rates from federally guaranteed student loan
programs Sincethe default prevention inithth began in 1991,Education has
barred 672 schools (most of which were proprietaxy schools) from participating
in federal student aid programs,and the default rate for propriefary schools has
dropped to 21.1 percent Defaulted loans have totaled about $2.6 billion
ammlIy the Iast couple of years, but the govemm em’stotaldrelatedto
subsequentefforts by the Department and its acthities to collect on these loans
after default claims had been paid to lenders.
mainly on the Department’sefforts to reduce loan defaults and in-        the
collection of default& loans and related issues. For example, in 1995,we
rates &an participating in federal student aid programs.= Many schools were
sub&ntMy delayingany punitive actions against them, our work showed, by
compute their default rates were inaccurate. While theirappeals and lawsuits
are being adjudlm      these schools are allowed to continue in the programs
and their students are receiving federally guaranteed loans, subject&g the

                                    . Iam-0
                                        . . . ns in sanctio~g
%tudentLoanDef&&  De~artmento Ed caixo
J+oblem Scha (GAOhlEEISQW9,Jf, 1; 199;.

10                               GAOIHEHS-97-2   12B P a5t8econd8ry Ednc8tion   Produets
ENCLOSURE1                                                           ENcLostm31
gvent        to possible additional default costs and risking these students‘
abili@ to continue their education and causing them to .&ur additional debt.
We recommendedthat the Congress give the Department the authority to hold
schools liable for the costs of defaults on any loans made duxingthe appeals
process and to require these schools to post a performance bond as a condition
of BBng an appeal. Although Education has included such provisions in its
proposals for the reauthoxization of the Higher Education Act in the 106th
Congress,the pm          have yet to be fohed       to the Congress.
In June 1997,we reported that stud-        are obt&ing federal student financial
aid (grants and subsidizedloans) for trait&g at prop&&y schoolsfor
ocapations with a surplus of trained woricezs.” In the 12 statesincluded in
our review, we found that in &SC&year 1995, $273miliion in federal funds
sub&&d the train@ of over lrZ,OOOproptietary school studentsin
occupationswith projected labor supply suxpluses We recommendedthat the
Congreeto help M                 students understand the usefulnessof recent
schoolgradu&m =&s+qand the Student Right-to-mow Act requiring
proprietaryschoolstoreportrecent graduat&&aining-reMedjobplacement
rates Wealso recommended that Education ensue that pnxpe&~ students
have accessto empbyment and earnings projections regarding their chosen
trabdng field in their locality. Education was receptive to our
recommendationq however, it may be too early for either the Congressor the
Department to have acted on the recommendations.

EscaMng college tuition and related costs and student debt levels have become
an issue
      . . of growing con-    to students and their families, coll?ge
-m=U                  ovemment   policymakters. As we reported in 1906,&om
1980to 1995,the averagetuition charged undergraduate students at 4year
public COnegeS ad lrnmeFsitiesincreased 234 perce~&” During approximately
the same period, median household income increased 8Qercent and the cost
ofMngrose74per&t          Ascollegecostshaveconlinuedtorise,statesupport
has funded a dimin@hedporfion of public colleges’revenues,and increasesin
federal funds for grants have not kept pace with tuition increases,resulting in

                                                    dents for w

1’GAO/HEHS9M64,Aug. 16,1996.
11                                GAWHEES-9?-212B    Paetsecondary Edacation Proancta
ElNcLosuREI                                                         ENcLOsuREI
students having to rely more heavily on student loans. This shift from grants to
loans is contributing to students leaving college with rapidly increasing debt

with escakhg college costs. For example, 17 states have implemented college
savings or prepaid tuition plans through which families may prepay tuition at
current levels to avoid higher payments when their children reach college age
and enroll. Four more states will have college sasGngsor prepaid t&ion plans
in place by the end of 1997,and the remaWng29statesareconsld~such
plans. Examples of 0th~ measurestaken or planned to deal with rising college
costs include shortening the time neededto eam a degree and limit@ tuition
increasestotheincreaseinthecostofliving.      Noclearconsensusexists,
however, on how to best make college more affordable.
The federal govemm ent has not directly addressedthe issue of how much
tuition and fees colleges charge their students. The federal &ategy in response
as&lable for federal student mcial aid pro~mostly           through loans. For
example, the Eigher Education Amendmentsof 1992greatly expanded accessto
student loans for students and their families In addition, the recent budget
agreement contains a number of tax beneGtand other provisions designedin
part to help Americans pay for higher education
Our work on college affordabili~ has involved analyz@ infozmation on the
extent of the problem and identi@ing examplesof measurestaken or planned
to address affordability. For example, our 1995report reviewed the fktors
   .                      in tuition costs at 4year public colleges and
tmmdtks for the l&year period ending with the 19W-95school year. Rises in
schools’expenditum, primarily for B           s&&s, and schools’greater
dependenceon tuition as arevenue source, according to our review, were
mostly responsible for the increase in tuition. St&es vary widely in the amount
per student they appropriate for higher education, we found, and this in ban
has remlted in widely varying amounts of tuition that schools charge among the
states-fi-om $1,524in Hawaii to $5,521Wmont in school year 1995-95.The
nationwide average tuition charged that year was $2,855.

                                   GA-97.212B       PutBccoud8ry   Educ8tiou Pmducts
ENcLOsuREI                                                       ENcLosuREI
ln 1995,we reviewed the states’efforts to encouragefamilies to save for college
through college savings or prepaid tuition program~.‘~ $even states had such
programs in 1995, and at least a dozen other states were considering
implementing prepaid tuition programs. Most participants were middle and
upper income familiesglower income families were underrepresent& probably
due to their lack of disaetionary income. Uncertain@about the pot.entiaI
implementing such programs, according to our review. The Congresspassed a
states subsequently est.&w       these kinds of programs.

The Department’s managementand owsight of the many student financial aid
m          millions of students, thousands of schools and lenders, multiple
guandg agencies and loan semicers, and numerous private entities. The
Department’s OIG, congredonal committees, we, and others We weR
documented the Dqmr&nent’s his@y of mismanagement,abuses,and other
management and ove&ght problems regarding these programs These concerns,
ixmpled with the signScant amount of federal dollars at risk, contributed to our
decision in 1992 to design&e the Federal Family Education Loan Program
(FFELP)a%i.gh-riskkea       BiIlionsofFFEUVundshavebeenhighly
vulnerable to fmud, waste, abuse, and went.              In 1996,we expanded
our considemtion of high risk to all of the student &uncial aid programs in
Education’s purview.
As expected with the s&d&ant amount of federal funds appropriated for
student Enancial aid and the Depsrtment’s history of poor man&ement and
GscaI accountdility, we have focused considerable resources in reviewinghow
the Depatment managesthese program. (See encL I& which shows the large
number of products we have issued on these topics.) Our West high-&& series
report, issued in 1997, summa&es and updates both our continuing concerns
about the Departmentfs vulnerabilities in mmaging and overseeingthe student
management controls and sgstems16 The following discussion hi@lights

                                  State TbitionRenmnent     Romam~

1%bh-Risk Series: Student FMancial Aid (GAO/HR-97-11,Feb. 1997).
13                                Gim97-2l2B       PutBecon~ Education
ENcLosuREI                                                                     ENCLOSUEE I
some of our concerns about Education’sprogram -0~          information
resources management,and financial managementof s&dent financial aid as
well as some of the Department’sactions to remedy them.
                            . .     .
in&ned,undevxtain&cumshnces,tospendpartoftheirreserme                 funds on
unnw         expenditure9 for additional staE; the purchase of faciUtieq
fur&me, computers, and the like; or higher sabies.” These reserves, which
arefederaMmdsthatthegovemm ent may recover, would then not be available
to the federal govemment or to the agenciesto cover losses on defaulted loans
that cannot be collected. To prevent some of these abuses,the Department
gwrantyagenciesmaymake.            ,
In 1995,we found that Education did not adequat@ overseethe FFELP’s
infoxmaBon q7stem’scomputersecmily, resultingin the system having serious
secmityweahessesthatcouldleadtounauthorWdaccessto           !3eamveFFELp
data such as student loan i&s? Nor were controls in place to prevent
in unauthorhed people alter& records affecting monefary transactions. We
    . .       that the Department develop and implement a computer security
admmMr&on program to omsee the sear&y of FFELP’s computer operalions
and made other recommendationsregardingwe&messeswe found. The
Department fully agreed with all of our recommendationsand has taken the
actions necessary to correct the problems we ideMiSed.
To address many of its long-standingmanagementand oversight problems, the
Department recently began a m@r meerjng            effort hewn as Easg Access
for Students and Institutions, or Project EMI, which will redesign the entb
student aid program delivery w         Education intends for this system to
include management and control functions, includhg accounting, auditjng and
program reviews, and quality control procedures such as computer edit checks
and applicant data checks. Although members of the higher education

17Guaran~Anencv Fhances (GAO&lEHS9&8lR, Mar- 11,1996).
*edend   Familv Education Loan Information Svstemz Weak Commster Controls
rncrea9eRisk of unauthorized Acce!Ss       . . Data ~GAOMMD-97-117,
                                    to SensltlE
June l2,1995).
14                                         GAomEEs-97.212E   P olkaxxondary   EdlIution   Pmducts
ENcLusuREI                                                            EIucLosuREr
Education’s top management’scommitment to it has been uncertain The
Department has not determined how long it will be before Project E%SI is fully
implemented but expects it to be a long-term underta&ng.

As new student aid programs were implemented during the past 30 years, the
Department developedseparatedata systems to support each of these
programs= ItnowhasdatasystemsforF’FElP,theFederalDirectLoan
Rogmm (FDLP), the Pell grant program, and camp-based programs, and
additional systemsfor other purposes Over the years, we have identiiled a
number of problems asso6aM with the Department’s data systems and its
ineffm     use of these systems.

In 1995,for example, we reviewed the Department’s use of its data systems to
ensure compliance with federal requirements and prevent the me         of
defaults and abuse? The Department did not eBe@vely use its data systems,
mulling in approximately 43,500dligible students receMng over $133 million
inloansduringSscalyearsl932through1992.       Wealsofoundtha&forschool
remived grants while attending two or more schools concurrently, which is
prohibited under the program

To address some of these problems, in 1994 the Department implemented the
receive and store student flnanclal aid data for all student Bnancial programs in
onecentrald&abase. NSLDSwasdesignedinparttoensurethataccur%eand
complete data are mailable on student loan indebtedness and to screen student
aid applicants for prior defaults and grant award overages. In 1995,the
Department reported that using NSLDS to prescreen loan applicants had
prevent& l25,OOO   previous defa&ers from receMng new loans, avoiding as
much as $310 million in future defaults. This also enabled Education to deny
about $?5million in Pell grants to ineligible students.
Although NSLDSwas envisionedas a central repository for student iinancisl aid

              . - .                    .           . mrou)                 .
   dent PinancUl A&  Data ot F’uhv Utihzed to Identjfv
Awarded Loans and Grants (~O/HEJB95449, July 11,1995).
15                                GA--97-2l2B      P ostaecondarg   Education   Pmdllca
ENcLosuREI                                                      ENCLOWREiI
Most of these systems are operated by different contractors and have different
types of computer hardware, opera&g systems, and ot&r-incompatible

Therefore, to allow NSLDSto accept data &om these other syskms, Education
and its data providers currently use over 300 computer formatting and editing
programs. TbisprocessiscuWxsome, expensh, and unrekable.
In July 1997,we recommended that Education develop, by June 30,1998, a
Department-wide qstems architecture as a hunework to allow compathility
am0ngalIthesesgstems” TheDepartmentagreedwithour zecommendation
to our recommendations, continued support from senior&@ Department

The Higk Educalion Act of 1966, as amended, requhs the Department to
prepare annual financial statements for FEW and requires these statements to
beaudited. ThisauditresponsibilityhasbeenexpandedwiththeCbief
F5Iunclal of6cersAct of 1990,which requhs agenciesto prepare consoli~
oragen~deGnancialstatemen&            Rscalyear1994wasthethiqdyearthese
Enanclal statements were prepared and audited, and, as in previous years, we
reported that auditors found that accuracy and reliability concerns about data
supporting the statements continued to prevent the Department &om
reasonably e&n@ingthe FFETPs costsa The audit also foundtbatthe
Department does not have qstems or pmcedumlnplacetoensuretbe
accuracy and validity of individual billing reports submit&d by guaran@
agenciesand lenders. As a result, the Depariment’s financial statements could
not be given a kle& audit opinion.
In responseto these and other finclings, Education has begun c@recWe actions.
that reqdres them to test guarmty agencies’billings for default payments. The

*dent                                       I
       Financial AidInformatio~~ &stems htechre            Neededto   fmDlmTe
Proaams’ Efficiency (GAOMBD-97422, July g, 1997).
      aal AMit. F ederal Familv Education Loan Rosram
               -   s
Statementsfor Fiscal Yeats 1994 and 1993 @AOLAIMD&,          Feb. 26, 1996).
  16                              GAWEEES-97-212B
                                          -.        F+atsccondsry
                                                              Ednation   Prodncll
ENcLosuREI                                                             EN-1
a new integrated Bnancial system called Education’s Central Automated
processing System. These and other actions Education-is taking indicate that it
is committed to resolving its hart&l managementproblems. A sustained
effort, however, .wiil be critical $o :theDepartme.nt’shaving sound financial
management and reliable financial information.

The United States provides ex&Mve opportun&y for collegeeducation for a
large proportion of its youth Our colleges and urdvees are the envy of the
world Yet with workforceq&i~ becoming a key element of U.S.
competitiveness, the education and tr&ning of noncollege youth have become
9n~crltlcaL            Inthelate198OsJhebasicskBsgapbetweenthe
qu&Waiions businessneeds for its employees and those of entry-level workers
was widening. Jobs were demar&ng increa&@y ski&d workers, while many
workers were inad-           prepand for the woruorce. Our work on the
traMlion of the nation’s youth from school to work reviewed the extent to
which the U.S. edu~onal system focuses on youth not planning to go to
-Some of our principal compeBtor nations have national policies that emphasize
preparing noncollege youth for employmentp In the United States in 1988,9
million of 33 million youth 16 to 24 years old would not havethe skills that
employers were demanding. In addition, only 15 percent of youth who entered
the ninth grade completed high school and went on to obtain a 4-year college
degree, our work showed. The mow-86          percent-got a job, obtained a 2-year
degree, dropped out of high school or college, or did not enter the workforce.

In 1993, four states had begun to acknowledge this deficiency in their schools
and started to develop comprehensiveschool&+work tcan&ion systen~~
Thesesystemshadfourinterre&&        components:
- processes for deveJopingacademic and occupational competen&s,
- career education and development,

                    .l?mmine Noncoll@ outh o Em~lovment in the
United States and F&e&n Countries (GAO&&-&   May ll,l990).
                                          Are   hvelo~irv  New Strateties to
                                                Sept 7, 1993).
17                                GAWEEES97412B        Postsecondary Edoution   Producta
EiNcLosuRE I                                                        EIKLmmEr
- extensive links between school systems and employers,and

- meanh@ul workplace experiences.
In 1994, the Congress passedthe School-to-WorkOpportunitiesAct to
     . *     more states to develop such systems. In fiscal year 1998,the
eon              is asking for $400million to continue to support the
implementation of schooI--work systemsthrough partnerships with states,
localities, and the pm       sector. This is the samelevel of funding as in 1997
(see encL IV), and the partnerships are jointly admhWe& by the Depar&nents
of Education and Labor.

Programs to improve the skills of the nation’s med        youth include title
II-C of the Job Training Parhr&ip Act (JTPA) ($130million for fiscal year
19B8), the summer youth program ($871 million), and Job Corps ($1.2 bitlion).
The summer youth progmm provides summerjobs for over a half miJlion low-
leaned in school and, for some, the oppor~Mty to work on their reading and
mathskllls. AlthougbthisprogramisgeneralIyviewedassucce&ulbecauselt
provides youth with work experieuce, the remedial education component has
not been consista@ applied nationwide. In additioq eEectivenessevaluation
studies have not been conducted on this program.
  . J’IFA youth program operatesyear round providing skill train@ to
dsadvantaged, out~f-school youth In 1990,this program sexvedmore job-
ieady and less jobready youth in proportion to each segment’spresence in the
eligible populatiot+ but d&par&s existed in the &ces provided these two
groups, according to our work Those who were less job ready (and likely
semlceq those who were more job ready recehd more intensh servicers
Amendments to JTPA in 1992addressedthis issue by requ&hg comprehensive
needs assessmentsof all new program participants, m         the lowest
intasi~ services for those for whom they were most appropriate. More
recently, the impact of this program has been questioned;26
                                                          in response, the
Labor Department is working with local programsto adopt “best-practice”
 approaches to improve progran results

               partnershn,       A&   .
                                                          and &l’lD~OVID&
Outcomes (GAO/EEHS-W,                 Mar. 4,19Q6).
18                                        GAWHEES-97-2uBPoatacamWyEducationFmducts
ENcLMuREI                                                            EbmlosuE?lEI
 For those youth most severeIy d&advantaged-especially school dropoWob
 Corps provides an opporhmity, away Mm their home qwimnu~ts, to obtain a
 effective~ess.~ Job Corps spends, on average, about $15,300m each
 participant-four times the $3,700spent by the JTPA youth pmgrau~ Although
 59 percent of Job Corps partkipants were placed in jobs (and another 11
 percent emolkd in further education programs), about half of the jobs obtained
 by students from six centers we visited were low skill-such osfast food
 worker-and not related to the Job Corps traWng, according to our review. Jn
 werespenton~~whodidnotcompletetheir~o~~.                             The36
percent of participants who completed their-4             an averagecost of
 $26~1~had better outcomes-they were f5ve times more likely than
noncompletersto obtain a training-related job; the completest also got 26
percent higher wages. Eken though 112 centers were in mn           in 1996, four
StateshadnocenMs Inadditio~thisprogramis~bytheLabor
Department, aud not, like virtually aU other job tmining m,        by the states.
-traMng programs as it could be.

%.JobVOIDS:H.&h Costs and Mixed Results Raise Questions About Propram’s
Effectiveness(GAO/HEHSX-180, June 30,1995).
19                               GAWHEE!S-97SlZB   P o6tsecon~Rducatioll   Products
ENCLO~II                                                              ENcLosuREIt



                       : Verikation Hebs Prevent Student Aid Pavmentsto
     . .
Inebglbie Non-
                           (GAO/HEHSQ?-153, Aug. 6,1QQ7).
            Crime . W&ultmMeetrne
                     -            *     Federal Remrtim Remirements
(GAO/EIEIsQ?62, Mar. ll,lQQ7).
Ixmcollm . AtbIetlcs
                 * . status0 Eforts to Promote GenderEauQ
(GAOAEHS-97-10, OCL 25, 1996). *
           Education    SelectedInformabon   0 Stu dentFinancialAidFIe&vedbv
       3mlrwmnts (GAOmEHs-967, Nov. 2i, 1995).

Natioti Service Programs: Am * mPUSA-Earlv ProgramResourceand
           Information (CAOem,               Aug. 2Q,lQQ5).

PeR Grant Costs (GAO/HEHSQ4-216BR, Sept. 28,1QQ4).

Pell Grants for Rison &n&q         (GAO-224R,              Aug. 5,19&I).

H&her Educ&ion~ Infomution          on Minoritv-Tarfeted    Scholarship (GAO/HEEB
94-77, Jan. 14, 1994).

student Fhancial Ai& Most Sum&mental Education Cb~~rtunitv Grants Are
Awarded to Needv !%udents (GAOIEZEDQ247, Jan. 31,1Q92).

StafEordStudent Loans LQW~~Sub&v Paments Could AchieveSa&u?!s
Without Affecthe Access (GAOLHED-Q2-7,Jan. 6,1QQ2).

                                                                .             .
                                                  to StudentsTakmeRem~

20                                    GAOfREES-97-212R     Postaeon- Edautiou Rodacts
ExcLosuREi II                                                  ENCLOSUREII

             . . Restructukuz Stu
Hipher Ed catzon                 dent Aid Could Reduce Low-Income
student Dk~ut kte (GAOiIEHWM3, Mar. 23,1996j.
&g&r  33ducat~o: Grants Effective at creasing Minorities’ Chances of
Grade    (GihXEIIS~l68,        May $1994).

Romietam School Poorer Student Oufxomesat Schools That Relv More on
Federal Student Aid (GAO/HEH%97-103,
                                  June 13,X497).

ProDrietarv &!hools= Nillions &tent to Train Students for 0iersu~~Eed
  cu~ations (tiO/kEiS-97-104, June 10,1997).
              .                   .
   dentLoansDefaulRates         H&XIricallv Black Colleges and Universities
             k, J,“z,, 19i;.
                                             FiomPrODrietawInsW&        'OlW
(GA0/T-HEEiS9&158,June 6,1996).
Problem Schools (GA&HEEIS9W9, June 1”9,1995).
                  . .                           .
       Rates at I3stoncaIlv Black Collegesand UIUWSI-ties (dAO/HEH%M-
97’R,Mar. 9,1994).
Student Financial Aid Proaxms: Pell Grant Propram Abuse (GiWI’-OSI-944,
OCL 27,1993).
Parent and Su~~lanental Stu en bans Volume an Default Trends for Fiscal
Years 1989to 1991(GAO/HEi9&Es,      SepL 22,lG2).
Student FInan .    dEd&       Can             to screen schools Before
Students Recgiij    &A~~91-14i~i$?7,            1991).

               characteristics of Defaulted Ekxrowers in the Stafford Student
              (GAO/ERD91+2BR,Apr. 26,1991).
                      .       - ofDefa&edBo~wer5g&tSchoo&
Accredited bv SevenAgencies(GAO/.KRWO-178m,Sept. l2,1990).

21                              GAOIHEWS.S?-ZUB
ENcLosuRElI                                                  ENcLosuREII

School Accreditatiom Activities of Seven&encies ‘I&$ Accredit Ronriehq
Schools (GTAO/HRD-~&~~~BR,    Sept l&1990).

States’Awe       College Tuition (GAOIHEHS-96-21 Sept. 19,1996).

1         u     ‘on:
PubIiccDll~      I costs (GA0/HEHs96164, Aug. l&1996).

              College Revenues(GAO/HEHW&lOR, Oct. 20,1995).
                                      Tuition PreDavmentPxwrams

                  Issues (GAO/HEEISQ~16R,Nov. 4,1994).

Medical-d                .
                 ts OpaonsExrst  * to Make Student Loan Pavments Mangeable
(GAOA&2-t,         iJov. 11, 1991).
Consolidated Student Loans throw      Ben& But Costs to Them and the
Govemmellt Grow (GAO-,           June 15, 1990).
htmovlnn Financial Aid hx!ram       Manament     and Over&&t
Student F’inancialAid Informaizo . &stems Archrtecture Needed to blDI’We
                     (GAO&I7-1p,       July 29,1991).
                                                       - Is June 1997
The Results Act: Obsermtio~~ o the Department of Educatxm
               PIan (GAO/EiEE&7-17 July 141997).
                                   . . !%tutonr Audit Threshold

         ent of Education: MulliDle. Nonintegrated Svstems Ham=
                               . &d. hwrams
          ent of Student F5nanaal               (GAO/r-FIEwAnkID-97-132,

ENcLosuRE                                                         ENCLOSUREII

Remtim  of Student Loan Enrollment Status (GAOIHEHS-9744R,Feb. 6,1997).
HaMZisk                       . AI
        Series: Studeut FManaal   ‘d (GAO/HE&97-11,
                                                  Feb. 1997).
                                    . .
                           mcs           of Schools in Two Maior Federal Loan
                              Jan. 31,1997). .
           .  of .Educatio!E status 0 AcLionsto hIDRiVe the BianaEemeDt of
     dent FManml AI‘6 (GAWkl43,            July l2,1996).
Pro-        for Land-Grant S&x&     (GAO/HEEMHlR, Mar. 28,1996).
Guarantv Aencv F-inances(GAO/IlEHS-MlR, Mar. 11,1996).

I%umcial Au& Federal Fmilv Education Loan Prog.ramlsF’inaucial
Statements for FWal Years 1994 and 1993(GAO/AlMD-9622, Feb. 26, 1996).
          ent of Educations Efforts bv the Office for Civil Rights to Resolve
       -AInericaD co-        (GA0/HEHs9&23, Dec. 11,1995).

Direct Student Loans (GA053ERSQ5225R,Aug. 25,1995).
                                    .           .
studentFhancialAi& Data atFulivutihzedtoIdeutafvhmD    l-ODliat&’
Awarded Loans and Grants (:AO/HEHS-Q5449,
                                        July 11,1995).
Fa eralF -          ‘on .                                       rnDut  ntrols
Increase~ofunauthoraedAccesstoSensl            ‘tive Data (GAO/AIblDW117,
June l2,1Q95).
Direct Student Loam Selected ChammrMcs of Partici~atim Schools (GAOA’-
HEHSQH23, Mar. 30,1995).
Demrlment of Educations O~zmhmilies to Realize Savings(GAO/rHEE?S-95
56, Jan. 18,1995).

                                  Edwation Icoan Ram’s       2Wancial
Statementsfor Fiscal Years 1993 and 1992(GAOhUMD44-131,June 30,1994).

23                                  GACUEEES97.ZleB
ENcLosTJREII                                                          ENcLosuREIf

$%udentLoans.. Milh'01)s Awarded ~DDI.ODIZ&~V. o US Nationals at Fore&n
          OOIS(GAO/HEXMM-28, Jan. 21,1994)!       - -
                   Education’s Student Loan Promm Controls Over
Lenders NeedJmDrcmmeDt (GAO/..,          Sept. 9,1993).
Direct student Loan Saiinys (G.A0~9%25Fi,            July 15,1993).

Financial Audit Federal Familv Educat~o Loan Prcjmms Fhanaal .
Statments for Fiscal Year 1992 (GAO/“93-4,   June 30: 1993).
HEAF 1992 Financial Condition (GAO/HE093-2lR, June 18,1993).

         dent LOam          e lhrmlment of Edwation’s ImDlmeDtation of Direct
Lending (GAOm-&6,              June 10,1993).

                              LonMtandm. Manaement Rob lems HaRIDer
Financial Audit    Guaranteed Stude Loan             mm’s Irhxnd Controls and
&~&~.~~NeedImDrDrovemeD~(GAO~~&,Mar.                       16,1993).
Dmct Loan Debate (GAOIBRD-9345R,Feb. 8,1993).
Federal Data Collection: Amncies’ Use of Consistent Race and Ethnic
      ens (GAO~GGD-9%25,   Dec. l&1992).
Ban&ion Series: Education Issues (GAO/OGG9%1~ Dec. 1992).

                  (GAO/HRD-Q&27,Nov. 25,1992).
~rwv                SoIvenm Can the GovemmeDtRecover HEAFk First-Year
-on          Cost of $212 Million? (GAO/HRD4$l2?32BB;
                                                   Nov. 13,1992).
                                         . . . Fees Could Reduce
Stafford Student Loam FVcmmtPavment of OqgpWaon
Costs (GAOIKELD-92-61;July 24,1992).
Guaranteed StudeDt Loam E%~hat@ I&me& Rate Floors Could Gene
Substantial Smines (GAO/HRM2-113, July 2l,lQ92).

24                                     GA--97.212B       P -ndary     Educ8uon produets
ENcLosuRErI                                                     ENCLOSUREII

     artment of Education: ManagementCommitment Neededto h~rme
Information Resources MansemeDt (GAO/LMTEG92-17,  Apr. 20,1992).
Stafford Student Loan Prom:    CorresoondenceSchools’Loan Volume
      es Sharply (GAO/HRD92-52FS,Mar. 13,1992).
PerkinsStuen Loans. ODbonsThat           d   eth e Pqgram More Financially
Indeuenden~(&O&92-5,        Dec. l2,1991).

Student Loans: Direct Loans Could Save Monev and Sjm~lifv Program
Amon          (GAO/HRD-91-144BR,Sept. 27,199l). .
PerkjnsStudentLoans    eed o BetterCotro          OverLoausRecoveredFrom
CIosed SchooIs (GAO&91-:of Mar.   27, lib):
                         . .                .
       Student Loam &lhous o Dollars m Loans Awarded to hlizible
BolTouwrs (GAOAmG91-7, Dec.:, 1990).
     cataonBem&hons. Reasousfor Delavs in Issuance (GAO/BRD-91&R,
      15, 1990).    -
                                      SecondarvMarket LendersVam Widelv

Student Loan Lenders: Information on the ActivUs of the First Jndermdent
     CornDasq (GAO/HRDam3FS, Sept. 25,199O).

&Nhl-lellti  &UdE!XltLOSDS:h&ibiiW! chan@SHaXEsh’&‘-Reduced hm
Volume (GAO-90-149FS,     Aug. 3,199O).
Guaranteed Student                               .
                                            Practices bv Guamntv

&~~~lement&l Student Loans     Who Are the Lamest Lenders? (GAO/HRD90-
72FS, Feb. 21, 1990).
Pell Grants: How the De&rtment of Education Estimates Promam Costs
(GAOIHRD-9&73BR,Feb. 21,199O).

25                                GAOIBEES-97-212BPostsecondargEducation Pmdncta
ElucLosuRELI:                                                         ENcLosuREII


                                       Recruit&. Trained. and Placed in Jobs

Job Cam: ComDarison of Federal Program With State Youth Training
IIliams (GAO/HEHs-M      Mar- zs, 1996).
Job ‘hainiw     Partne&m Act. Lam-Term Ramings and EmDlovment Outcomes

(GAO-,                Mar- 4,1996).

Jo b Co IDS: HighCostsandMixedResultsRaiseQuestionsAboutprpzrramS                     I
               (GAOAEHS-9~180, June 30,1995).

                 SchooltoWork    StatesAre DeveIo~in~NewStral&esto
     sre Sfa@gpts for Jobs (CAO/ERD9M39, Sept 7,1993).

                School to Work Linking -cation           and Worksite T&r&q
(GAO/fIRD91-105, Aug. 2, 1991).
                ems          Noncollepe Youth for &nDlovment in the United
States and Fore&n Countrie@ (GAO/HRD-9048, May 11,199O).

26                                    GAWHEES-97-212E   PuweconduyEdncationProducte
 ENCLOSURE m                                                    ExLosuREIII

                                             Appropxwions (in millions)

     Pell grants                                 #,QlQ.O                $7,636.(1
     supplementalEducational                        683.4                  683.4
     college work study                             830.0                 667.0
     Pe!rkinskmls                                   178.0                  188.0
     statestudentIncen~Grants                        50.0                     0.0
     Family EiducationLoans                      . 177.0                 $125.6
     mrect loans                                   600.9                 lq83.3
     Other aid for students                        666.7                  732.3
     Other higher education           I            287.9                  276.0
     t-lowarduniversity                            196.0                  196.0
     Collegehous@ and academic                       3.7                      4.1

Source: Deparmat of Education Fiscal Year 1998Budget Summazy.

27                               GACVEEHS-97-212B
                                                Postsecondary Education R~ncts
ENcLosuREIv                                               ENmsuREIv

     Job Corps


28                            GAOfEEHS97-212B F+0~~~0nd8ryEduutionprodacto
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