oversight

Student Loans: Selected Characteristics of Schools in Two Major Federal Loan Programs

Published by the Government Accountability Office on 1997-01-31.

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

                 United States General Accounting Office

GAO              Report to the Chairman, Committee on
                 the Budget, House of Representatives



January 1997
                 STUDENT LOANS
                 Selected
                 Characteristics of
                 Schools in Two Major
                 Federal Loan Programs




GAO/HEHS-97-45
                       United States
GAO                    General Accounting Office
                       Washington, D.C. 20548

                       Health, Education, and
                       Human Services Division

                       B-275721

                       January 31, 1997

                       The Honorable John R. Kasich
                       Chairman, Committee on the Budget
                       House of Representatives

                       Dear Mr. Chairman:

                       Federal support for student financial aid contributed about $35 billion to
                       postsecondary education in fiscal year 1995. Most of this aid—$27 billion—
                       was provided through student loans, authorized under the Higher
                       Education Act of 1965, as amended. Eligible postsecondary institutions
                       can choose to give students access to federally supported loans through
                       either the William D. Ford Federal Direct Loan Program (FDLP) or the
                       Federal Family Education Loan Program (FFELP).1 The Omnibus Budget
                       Reconciliation Act of 1993 (P.L. 103-66, Aug. 10, 1993) called for FDLP to
                       provide 5 percent of federal student loans during school year 1994-95,
                       increasing to at least 60 percent by school year 1998-99.

                       You asked us to provide information about comparative levels of activity
                       in the two programs. As agreed with your staff, we determined the
                       following:

                   •   the number of schools in each program, and the distribution of student
                       loans between the two;
                   •   the loan default rate for schools associated with each program; and
                   •   the number of schools in each program (1) on a state-by-state basis and
                       (2) among the 100 largest postsecondary schools participating in these
                       federal loan programs.

                       Our review was based on computer analysis of records for all
                       postsecondary schools obtained from the Department of Education.
                       Although we did not verify the accuracy of data obtained from the
                       Department, its databases are readily available and can by used by the
                       education community for similar analyses. For more explanation of our
                       scope and methodology, see appendix I.


                       As of October 1996, 1,622 schools were in FDLP (that is, about 26 percent of
Results in Brief       schools participating in either of the federal loan programs). While many

                       1
                        Under FDLP, loans are made by schools on behalf of the government with federal funds. Under
                       FFELP, students receive loans from private lenders, such as banks, with the Department of Education
                       ensuring that the lender will receive payment.



                       Page 1                                               GAO/HEHS-97-45 FDLP and FFELP Schools
             B-275721




             of these schools in FDLP were also in FFELP, the remaining 74 percent of all
             schools were solely in FFELP. Public 4-year and proprietary schools were
             the most represented kind of schools in FDLP; 42 and 41 percent of them,
             respectively, were chosen by the Department to be in the program. The
             percentage of federal student loan volume provided by FDLP was 7 percent
             in school year 1994-95 and 30 percent in school year 1995-96.

             Not enough time has elapsed for loan default information to be available
             for FDLP. For FFELP, a comparison of default rates for schools that used
             both programs and schools that used FFELP exclusively showed that rates
             were similar. For schools in FDLP, the FFELP default rate was 10.2 percent
             for the fiscal year 1993 cohort year; for schools only in FFELP, the rate was
             9.9 percent.

             Every state has schools in FDLP, although the proportion of schools in the
             program varies considerably. Thirteen states had more than half of their
             fiscal year 1995 loan volume at FDLP schools, while 17 states had less than
             25 percent. The 100 largest schools—a list that primarily includes 4-year
             public schools but also includes some community colleges and private
             4-year schools—were evenly divided as to whether they were in FDLP. Fifty
             schools were in FDLP; 50 were not.


             Eligible postsecondary institutions can choose to give students access to
Background   federally supported loans through FFELP or FDLP.2 Through FFELP, lenders,
             mostly from the private sector, make loans to eligible borrowers, and
             state-designated guaranty agencies guarantee the loans against borrower
             default. In contrast, FDLP, originally authorized under the Higher Education
             Amendments of 1992, was established, in part, to simplify the student loan
             process by eliminating private sector lenders and guaranty agencies.
             Under FDLP, the government makes the loans, but the schools or
             Department of Education contractors actually disburse the funds on
             behalf of the government.

             The 1993 legislation called for FDLP to be phased in over 5 years, beginning
             with FDLP loans representing 5 percent of total new loans during year 1
             (July 1, 1994, through June 30, 1995) and rising to 60 percent or more in
             year 5 (July 1, 1998, through June 30, 1999). The Department is responsible
             for implementing and administering FDLP and for selecting private
             contractors for the day-to-day servicing of loans.

             2
              Schools can make FDLP loans to some students and allow other students to obtain loans through
             FFELP, but a student may not receive both an FDLP loan and an FFELP loan for the same period of
             enrollment.



             Page 2                                              GAO/HEHS-97-45 FDLP and FFELP Schools
                                        B-275721




                                        As of October 1996, 1,622 schools were in FDLP (that is, about 26 percent of
Number of FDLP and                      all FDLP and FFELP schools). These included 354 schools that entered FDLP
FFELP Schools and                       in year 3 (July 1, 1996, through June 30, 1997). As table 1 shows, a larger
Their Loan Volumes                      percentage of proprietary3 and public 4-year schools were in FDLP than
                                        4-year private and less-than-4-year public and private schools.

                                        For the purposes of our analysis, “FDLP schools” are those that the
                                        Department expected to participate as of October 1996.4 Most of these
                                        schools were also FFELP participants, providing FFELP loans to some
                                        students and FDLP loans to others. “FFELP schools” are those that the
                                        Department listed as FFELP participants5 as of October 1996 but that were
                                        not listed by the Department as “FDLP schools.”

Table 1: Types of Schools in FDLP and
FFELP, as of October 1996                                                                                                FDLP schools as a
                                                                                             FDLP            FFELP        percentage of all
                                        Type of school                                    schoolsa          schools               schools
                                        Public 4-year                                               245            335                         42%
                                        Private 4-year                                              241        1,192                           17
                                        Public less-than-4-year                                     170        1,345                           11
                                        Private less-than-4-year                                     52            477                         10
                                        Proprietary                                                 914        1,341                           41
                                        Total                                                  1,622           4,690                           26%
                                        Note: For further details, see table II.1 in appendix II.
                                        a
                                            Schools may also be providing FFELP loans.



                                        Although table 1 indicates that fewer 4-year schools than proprietary
                                        schools are participating in FDLP, 4-year schools accounted for most of the
                                        volume of loans for both FDLP and FFELP schools. As shown in figure 1,
                                        public 4-year schools accounted for the largest share of loans at FDLP
                                        schools; private 4-year schools accounted for the largest share at FFELP
                                        schools.




                                        3
                                         Proprietary schools are private, for-profit postsecondary institutions.
                                        4
                                         These schools had applied to participate in FDLP, were determined to be eligible, had not indicated
                                        their intent to withdraw from or defer participation in FDLP, and had neither closed nor been
                                        terminated by the Department.
                                        5
                                         These were listed in the Department’s Postsecondary Education Participants System as FFELP
                                        participants, but may or may not have students that have received FFELP loans.



                                        Page 3                                                      GAO/HEHS-97-45 FDLP and FFELP Schools
                                  B-275721




Figure 1: Fiscal Year 1995 Loan
Volume for Schools in FDLP and
FFELP, as of October 1996             Dollars in Billions
                                      $20




                                       15




                                       10




                                        5




                                        0
                                                               FDLP                                        FFELP

                                            Proprietary
                                            Private Less-Than-4-Year
                                            Public Less-Than-4-Year
                                            Private 4-Year
                                            Public 4-Year




                                  As of October 1996, schools that accounted for 38 percent of loan volume
                                  in fiscal year 1995 were in FDLP in year 3.6 As shown in table 2, schools
                                  accounting for nearly half of public 4-year school loan volume in fiscal
                                  year 1995 were in FDLP during year 3. In contrast, schools accounting for
                                  less than one-quarter of private 4-year school loan volume in fiscal year
                                  1995 were in the program’s third year.



                                  6
                                   Loan volumes presented in this report are amounts of loan commitments before cancellations. They
                                  are not and should not be construed as estimates of current or future loan volume. (See app. I.)



                                  Page 4                                               GAO/HEHS-97-45 FDLP and FFELP Schools
                                        B-275721




Table 2: Fiscal Year 1995 Loan Volume
for Schools in FDLP and FFELP, as of    Dollars in millions
October 1996                                                            Loans to           Loans to                           FDLP school
                                                                        students           students                            volume as a
                                                                         at FDLP           at FFELP       Total loan         percentage of
                                        Type of school                  schoolsa            schools        volumeb                   totalc
                                        Public 4-year                     $5,749              $5,904         $11,652                      49%
                                        Private 4-year                      2,440              7,614          10,054                      24
                                        Public
                                        less-than-4-year                      335              1,039            1,373                     24
                                        Private
                                        less-than-4-year                       74                204                278                   26
                                        Proprietary                         1,218              1,139            2,357                     52
                                                b
                                        Total                             $9,815             $15,900         $25,715                      38%
                                        a
                                         Includes FDLP and FFELP loans to students at FDLP schools. Table II.2 in appendix II shows the
                                        amounts of each type of loan for these schools.
                                        b
                                            The sum of figures may not equal the total shown because of rounding.
                                        c
                                            Numbers may not equal the percentage of the figures shown because of rounding.



                                        See tables II.3 through II.5 in appendix II for details concerning schools
                                        selected to begin participating during year 3.

                                        During year 1, FDLP loans accounted for 7 percent of total FDLP and FFELP
                                        loans. During year 2, FDLP provided about 30 percent of total loans. As
                                        shown in figure 2, loans to students at 4-year public schools represented
                                        the largest portion of FDLP volume in both years.




                                        Page 5                                                 GAO/HEHS-97-45 FDLP and FFELP Schools
                                   B-275721




Figure 2: Comparison of FDLP and
FFELP Loan Volume During FDLP’s
First 2 Years                       Dollars in Billions
                                    $25



                                      20



                                      15



                                      10



                                       5



                                       0
                                                     FDLP             FFELP               FDLP                FFELP

                                                  Year 1                                 Year 2

                                           Proprietary
                                           Private Less-Than-4-Year

                                           Public Less-Than-4-Year

                                           Private 4-Year

                                           Public 4-Year




                                   Note: For data supporting figure 2 and additional data such as FDLP volume as a percentage of
                                   total volume for each type of school, see tables II.6 and II.7 in appendix II.




                                   Many of the schools participating in FDLP during year 2 continued to
                                   participate, to some extent, in FFELP. Most of the loans made to students at
                                   year 2 schools, however, were FDLP loans, ranging from 67 percent at
                                   private less-than-4-year schools to 92 percent at public less-than-4-year
                                   schools (see details in table II.8 in app. II).




                                   Page 6                                              GAO/HEHS-97-45 FDLP and FFELP Schools
                        B-275721




                        Aggregate default rates for FDLP and FFELP schools were similar (see fig. 3).
Default Rates of FDLP   Because default rate data were not yet available for FDLP, we made our
and FFELP Schools       analysis for schools that are in FDLP based on their FFELP default rates. For
                        schools participating in FDLP as of October 1996, 10.2 percent of students
                        that entered their repayment period for FFELP loans during fiscal year 1993
                        defaulted by the end of fiscal year 1994 (commonly referred to as the fiscal
                        year 1993 cohort default rate7). For schools continuing to participate only
                        in FFELP, the default rate was 9.9 percent. Although the FFELP rate was
                        somewhat lower, the aggregate default rate for FFELP proprietary schools
                        was higher than for proprietary schools that participated in FDLP.




                        7
                         Generally, the statutory cohort default rate is (1) the number of student borrowers with subsidized
                        and unsubsidized loans that entered repayment in a cohort fiscal year and defaulted on those loans by
                        the end of the following fiscal year, divided by (2) the total number of borrowers that entered
                        repayment in the cohort fiscal year. In cases in which fewer than 30 borrowers entered repayment, the
                        rate used is an average for a 3-year period.



                        Page 7                                                GAO/HEHS-97-45 FDLP and FFELP Schools
                                      B-275721




Figure 3: FFELP Default Rates for
FDLP and FFELP Schools, 1993 Cohort   25
Year

                                      20




                                      15




                                      10




                                       5




                                       0
                                                 r



                                                             r



                                                                          -4- lic
                                                                                ar


                                                                                            -4- te
                                                                                                  ar



                                                                                                             y



                                                                                                                        ls
                                                 ea



                                                            ea




                                                                                                            tar



                                                                                                                       oo
                                                                                          an riva
                                                                             Ye



                                                                                               Ye
                                                                        an Pub
                                             -Y



                                                           4-Y




                                                                                                        rie



                                                                                                                   ch
                                            c4




                                                                                            P



                                                                                                       op



                                                                                                                  lS
                                                       te
                                           bli



                                                      iva




                                                                                                       Pr



                                                                                                                  Al
                                                                    -Th



                                                                                      -Th
                                       Pu



                                                      Pr




                                                                    ss



                                                                                     ss
                                                                   Le



                                                                                     Le




                                                            FDLP

                                                            FFELP



                                      Note: Data supporting this figure, and similar data for cohort fiscal years 1991 and 1992, are
                                      found in table II.9 in appendix II.



                                      Although FDLP schools were located in all 50 states, participation in FDLP
FDLP Participation by                 varied widely by state. As shown in figure 4, FDLP schools as of
State and Among the                   October 1996 represented 50 percent or more of fiscal year 1995 loan
100 Largest Schools                   volume in 13 states but less than a quarter of loan volume in 17 states.

                                      See tables II.10 and II.11 in appendix II for data for each state.




                                      Page 8                                                                           GAO/HEHS-97-45 FDLP and FFELP Schools
                                         B-275721




Figure 4: FDLP Schools’ Share of Fiscal Year 1995 Loan Volume




                                         Of the 100 schools with the largest preliminary fall 1995 enrollments that
                                         were eligible to participate in either of the two student loan programs as of
                                         October 1996, 50 were FDLP participants and 50 were not. As shown in
                                         figure 5, most of these were public 4-year schools, including 40 FDLP
                                         participants and 34 FFELP participants.




                                         Page 9                                   GAO/HEHS-97-45 FDLP and FFELP Schools
                                         B-275721




                                         The 100 schools are listed in table II.12 in appendix II.


Figure 5: Half of the 100 Schools With
the Largest Enrollments Were FDLP
Schools, as of October 1996                Number of Schools
                                           60



                                           50



                                           40



                                           30



                                           20



                                           10



                                            0
                                                                 FDLP                        FFELP


                                                Public Less-Than-4-Year

                                                Private 4-Year

                                                Public 4-Year




                                         On January 10, 1997, the Department of Education provided us comments
Agency Comments                          on a draft of this report. The Department said that it could not precisely
                                         replicate the results of our analysis but, with few exceptions, their results
                                         deviated only slightly from ours. It also said that we did not clearly
                                         describe our data or offer a sufficient explanation of the reasons for the
                                         results of our analysis.

                                         We reviewed the specific instances noted by the Department and revised
                                         the report to clarify or correct tables, figures, and descriptions as



                                         Page 10                                   GAO/HEHS-97-45 FDLP and FFELP Schools
B-275721




appropriate. During our review, we noted various inconsistencies among
sets of data obtained from Department staff, and we attempted to resolve
them to the extent practicable. We have revised the report to provide more
precise descriptions of the information to help explain apparent
inconsistencies.

The Department also suggested that our report discuss the data at more
length and offer explanations for the patterns we observed. The scope of
our review did not include assessing reasons for the trends and patterns
identified. Rather, our analysis was focused on providing information on
schools’ loan activities in the two loan programs.


We conducted our review from October through December 1996 in
accordance with generally accepted government auditing standards.

We are sending copies of this report to the Secretary of Education,
appropriate congressional committees, and other interested parties. Please
call me at (202) 512-7014 if you or your staff have any questions regarding
this report. Major contributors included Joseph J. Eglin, Jr., Assistant
Director; Charles M. Novak; Benjamin P. Pfeiffer; and Charles H. Shervey.

Sincerely yours,




Carlotta C. Joyner
Director, Education
  and Employment Issues




Page 11                                 GAO/HEHS-97-45 FDLP and FFELP Schools
Contents



Letter                                                                                          1


Appendix I                                                                                     14

Scope and
Methodology
Appendix II                                                                                    16

Selected Information
on FDLP and FFELP
Schools
Tables                 Table 1: Types of Schools in FDLP and FFELP, as of                       3
                         October 1996
                       Table 2: Fiscal Year 1995 Loan Volume for Schools in FDLP and            5
                         FFELP, as of October 1996
                       Table II.1: Types of Schools in FDLP and FFELP, as of                   16
                         October 1996
                       Table II.2: Fiscal Year 1995 Loan Volume at FDLP Schools, as of         16
                         October 1996
                       Table II.3: Comparison of Schools the Department Listed as              17
                         FDLP Candidates for Year 2 and FDLP Candidates for Year 3
                          With Schools That Participated Each Year
                       Table II.4: Number of Schools Selected as New FDLP Participants         17
                         for Year 3, and Those Withdrawn, as of October 1996
                       Table II.5: Fiscal Year 1995 FFELP Loan Volumes for Schools             18
                         Selected as New FDLP Participants for Year 3, and Those
                         Withdrawn, as of October 1996
                       Table II.6: Volume of FDLP and FFELP Loans During Year 1                18
                       Table II.7: Volume of FDLP and FFELP Loans During Year 2                19
                       Table II.8: Loans in Year 2 to Students Attending FDLP Schools          19
                       Table II.9: FFELP Default Rates for FDLP and FFELP Schools by           20
                         Cohort Fiscal Year
                       Table II.10: FDLP Participation by State, as of October 1996            21
                       Table II.11: Fiscal Year 1995 FDLP and FFELP Loan Volume at             23
                         FDLP and FFELP Schools, by State, as of October 1996
                       Table II.12: Loan Program Participation as of October 1996 for          25
                         the 100 Schools With Largest Enrollments in Fall 1995




                       Page 12                               GAO/HEHS-97-45 FDLP and FFELP Schools
          Contents




Figures   Figure 1: Fiscal Year 1995 Loan Volume for Schools in FDLP and           4
            FFELP, as of October 1996
          Figure 2: Comparison of FDLP and FFELP Loan Volume During                6
            FDLP’s First 2 Years
          Figure 3: FFELP Default Rates for FDLP and FFELP Schools,                8
            1993 Cohort Year
          Figure 4: FDLP Schools’ Share of Fiscal Year 1995 Loan Volume            9
          Figure 5: Half of the 100 Schools With the Largest Enrollments          10
            Were FDLP Schools, as of October 1996




          Abbreviations

          FDLP       Federal Direct Loan Program
          FFELP      Federal Family Education Loan Program


          Page 13                               GAO/HEHS-97-45 FDLP and FFELP Schools
Appendix I

Scope and Methodology


             Using data from the Department of Education, our work focused on FDLP
             and FFELP loan volume during FDLP’s first 2 years. We used the term
             “federal student loans” to refer to both FDLP and FFELP loan commitments
             before cancellations.8 We excluded consolidated loans. Some schools
             identified as FFELP schools as of October 1996 had been FDLP schools
             earlier and had students who received FDLP loans in fiscal year 1995.

             For some comparisons, we used schools’ loan volume data for fiscal year
             1995 because data were not available by program year. We identified FDLP
             schools using the Department’s list of schools expected to participate in
             FDLP as of October 1996. Many of these schools also made FFELP loans.
             Schools identified as FFELP schools are those that were not in FDLP that
             were listed as FFELP participants. We did not verify the accuracy of data
             obtained from the Department.

             To determine the types of schools participating in FDLP and FFELP, we
             analyzed Department data concerning schools’ characteristics and placed
             schools in five groups: public 4-year, private 4-year, public less-than-4-year,
             private less-than-4-year, and proprietary. We excluded foreign schools.9 No
             foreign schools were FDLP participants as of October 1996. We included in
             the public and private 4-year groups institutions that offer baccalaureate
             degrees or more advanced programs.

             To determine the aggregate cohort FFELP loan default rate for each of these
             types of schools, we followed the statutory methodology and calculated
             aggregate default rates by dividing the total number of defaulting FFELP
             borrowers by the total number of FFELP borrowers entering repayment. We
             calculated separate rates for schools listed as participants in FDLP and
             those that were not. Data needed to compute default rates for FDLP loans
             were not available.

             To determine how participation in FDLP varies by state, we calculated for
             each state the total fiscal year 1995 dollar amount of FDLP and FFELP loans
             provided to students attending postsecondary institutions in each state



             8
              Loan commitments are the amounts of loans that lenders or schools commit to make (and guaranty
             agencies commit to guarantee) to students or their parents. These amounts can be higher than the net
             principal amounts of loans made because of cancellations. A loan may be cancelled if loan proceeds
             are never disbursed to the borrower, the loan check remains uncashed 120 days after disbursement,
             loan proceeds in an escrow account are undisbursed for more than 120 days after being transferred to
             the account, or the loan is repaid in full within 120 days of disbursement.
             9
              During fiscal year 1995, students at about 500 foreign schools received approximately $140 million in
             FFELP loans.



             Page 14                                                GAO/HEHS-97-45 FDLP and FFELP Schools
Appendix I
Scope and Methodology




that the Department listed as FDLP participants as of October 1996 and the
total amount provided to students at FFELP schools in the state.

To determine which of the 100 largest schools participated in FDLP, we
compared the Department’s list of schools participating in the program
with a list of the 100 largest institutions that participate in federal student
loan programs developed from the Department’s National Center for
Education Statistics’ preliminary fall 1995 enrollment survey data.

In some cases branches of schools use separate Department identification
numbers for administering federal loan programs. For the purposes of this
analysis, we counted each entity using a separate identification number as
a separate school.




Page 15                                    GAO/HEHS-97-45 FDLP and FFELP Schools
Appendix II

Selected Information on FDLP and FFELP
Schools

Table II.1: Types of Schools in FDLP
and FFELP, as of October 1996                                                             FDLP schoolsa                  FFELP schools
                                                                                              Percentage                     Percentage
                                                                                                 of FDLP                       of FFELP
                                       Type of school                                  Number    schools              Number    schools
                                       Public 4-year                                        245             15%            335            7%
                                       Private 4-year                                       241             15            1,192          25
                                       Public less-than- 4-year                             170             10            1,345          29
                                       Private less-than-4-year                               52              3            477           10
                                       Proprietary                                          914             56            1,341          29
                                       Total                                               1,622           100%b          4,690          100%
                                       a
                                           Includes schools that also make FFELP loans.
                                       b
                                           The sum of the numbers shown is not equal to the total because of rounding.



Table II.2: Fiscal Year 1995 Loan
Volume at FDLP Schools, as of          Dollars in millions
October 1996                           Type of school                            FDLP loans             FFELP loans                  Total
                                       Public 4-year                                   $2,064                 $3,685                $5,749
                                       Private 4-year                                     1,261                   1,179              2,440
                                       Public less-than-4-year                             217                     118                   335
                                       Private less-than-4-year                             71                       3                   74
                                       Proprietary                                        1,070                    148               1,218
                                       Totala                                          $4,683                 $5,132                $9,815
                                       a
                                           The sum of figures may not equal the total shown because of rounding.




                                       Page 16                                                    GAO/HEHS-97-45 FDLP and FFELP Schools
                                         Appendix II
                                         Selected Information on FDLP and FFELP
                                         Schools




Table II.3: Comparison of Schools the
Department Listed as FDLP                                                                                           Fiscal year 1995 loan
Candidates for Year 2 (in                                                             Number of schoolsa              volume (millions)
March 1995) and FDLP Candidates for      Schools                                          Year 2         Year 3          Year 2          Year 3
Year 3 (in March 1996) With Schools
                                         Listed as new FDLP candidates as
That Participated Each Year              of March                                          1,309             539         $7,146         $2,611
                                         Remained on the list of expected
                                         participants                                      1,191             297          6,723             851
                                         Deleted from the list of expected
                                         participants                                        118             242            423           1,760
                                         Not listed as candidates in March
                                         but later added to the list of
                                         expected participants                                 42             57            208                  34
                                         Total new FDLP schools                            1,233             354         $6,931            $885
                                         Note: As of October 1996, 354 schools had agreed to join FDLP in its third year. An additional 242
                                         schools that were listed as new participants for year 3 as of March 1996, however, subsequently
                                         declined to participate or otherwise were deleted from the list of expected participants. By
                                         comparison, of the 1,309 schools that had agreed to join FDLP in its second year, as of
                                         March 1995, 118 had declined to participate (or for some other reason were deleted from the list
                                         of expected participants). The other 1,191 schools were still listed as year 2 participants as of
                                         March 1996. The 242 schools listed as year 3 candidates as of March 1996 that were deleted
                                         from the list had a significantly larger loan volume ($1.76 billion) than the schools dropping out of
                                         the program’s second year ($423 million). They also had a much larger loan volume than the
                                         schools that agreed to join FDLP in its third year ($885 million).
                                         a
                                           These included schools that withdrew, deferred participation, closed, or were terminated from
                                         the program by the Department.



Table II.4: Number of Schools Selected
as New FDLP Participants for Year 3,                                                                               Schools
and Those Withdrawn, as of                                                                                    deleted from
October 1996                                                                                                     the list of               Net
                                                                                                     Schools     expected             schools
                                         Kind of school                                              selected participantsa           selected
                                         Public 4-year                                                      65                48                 17
                                         Private 4-year                                                     95                74                 21
                                         Public less-than-4-year                                            78                49                 29
                                         Private less-than-4-year                                           26                11                 15
                                         Proprietary                                                       385              113             272
                                         All schools                                                       649              295             354
                                         a
                                          These included schools that withdrew, deferred participation, closed, or were terminated from
                                         the program by the Department.




                                         Page 17                                                GAO/HEHS-97-45 FDLP and FFELP Schools
                                        Appendix II
                                        Selected Information on FDLP and FFELP
                                        Schools




Table II.5: Fiscal Year 1995 FFELP
Loan Volumes for Schools Selected as    Dollars in millions
New FDLP Participants for Year 3, and                                                                               Schools
Those Withdrawn, as of October 1996                                                                            deleted from
                                                                                                                  the list of           Net
                                                                                                      Schools     expected         schools
                                        Kind of school                                                selected participantsa      selectedb
                                        Public 4-year                                                  $1,349            $1,037           $311
                                        Private 4-year                                                   1,094             814             279
                                        Public less-than-4-year                                           126               74             51
                                        Private less-than-4-year                                            36              23             14
                                        Proprietary                                                       285               82             203
                                        All schoolsc                                                   $2,889            $2,031           $859
                                        a
                                          These included schools that withdrew, deferred participation, closed, or were terminated from
                                        the program by the Department.
                                        b
                                         The difference between the amounts of loans for schools selected and schools withdrawn may
                                        not equal the net shown because of rounding.
                                        c
                                            The sum of the numbers shown may not equal the total because of rounding.



Table II.6: Volume of FDLP and FFELP
Loans During Year 1                     Dollars in millions
                                                                                                                                     FDLP
                                                                                                                                 loans as a
                                                                                                         FFELP                  percentage
                                        Type of school                              FDLP loans           loansa           Total     of total
                                        Public 4-year                                     $1,311         $9,469         $10,780            12%
                                        Private 4-year                                        361          9,210          9,571             4
                                        Public less-than-4-year                                21          1,338          1,359             2
                                                                                                  b
                                        Private less-than-4-year                                0            374           374              0c
                                        Proprietary                                            66          2,444          2,510             3
                                                 d
                                        Total                                             $1,760        $22,834         $24,594             7%
                                        Note: Table excludes about $100 million in FFELP loans to students attending schools whose type
                                        was not indicated.
                                        a
                                            Includes FFELP loans to students at schools participating in FDLP.
                                        b
                                            Less than $500,000.
                                        c
                                            Less than 0.5 percent.
                                        d
                                            The sum of the figures shown may not equal the total because of rounding.




                                        Page 18                                                 GAO/HEHS-97-45 FDLP and FFELP Schools
                                          Appendix II
                                          Selected Information on FDLP and FFELP
                                          Schools




Table II.7: Volume of FDLP and FFELP
Loans During Year 2                       Dollars in millions
                                                                                                                                         FDLP
                                                                                                                                     loans as a
                                                                                            FDLP          FFELP                     percentage
                                          Type of school                                    loans         loansa           Totalb       of total
                                          Public 4-year                                    $5,484         $6,862          $12,346            44%
                                          Private 4-year                                     1,986         8,528           10,514            19
                                          Public less-than-4-year                              293         1,213            1,506            19
                                          Private less-than-4-year                                18         362             380              5
                                          Proprietary                                          503         2,147            2,649            19
                                          Totalb                                           $8,284        $19,111c         $27,395            30%
                                          Note: Table excludes about $200 million in loans to students attending schools whose type was
                                          not indicated.
                                          a
                                              Includes FFELP loans to students at FDLP schools.
                                          b
                                              The sum of the figures shown may not equal the total because of rounding.
                                          c
                                           According to Department Budget Service staff, the total, as of January 1997, for FFELP loans
                                          during year 2, was $18.8 billion.



Table II.8: Loans in Year 2 to Students
Attending FDLP Schools                    Dollars in millions
                                                                                           FDLP              FFELP           FDLP loans as a
                                          Type of school                                   loans             loansa        percentage of total
                                          Public 4-year                                   $5,484               $496                          92%
                                          Private 4-year                                   1,986                 421                         83
                                          Public less-than-4-year                            293                   23                        93
                                          Private less-than-4-year                            18                   24                        43
                                          Proprietary                                        503                 415                         55
                                          Total                                           $8,284             $1,379                          86%
                                          a
                                          Table includes about $639 million of FFELP loans to students at 441 schools listed as of
                                          March 1996 as FDLP participants whose students did not receive FDLP loans during year 2.
                                          b
                                              Percentages shown may not equal the percentages of dollar amounts because of rounding.




                                          Page 19                                                  GAO/HEHS-97-45 FDLP and FFELP Schools
                                         Appendix II
                                         Selected Information on FDLP and FFELP
                                         Schools




Table II.9: FFELP Default Rates for FDLP and FFELP Schools by Cohort Fiscal Year
Percentage of borrowers that defaulted
                                                                1991                          1992                          1993
Type of school                                             FDLP          FFELP            FDLP         FFELP            FDLP          FFELP
Public 4-year                                                 6.6%            6.6%           7.2%           6.9%           6.7%           6.7%
Private 4-year                                                7.1             5.2            7.7            5.8            7.6            5.6
Public less-than- 4-year                                     14.4           14.5           15.1            14.3           14.8           14.5
Private less-than- 4-year                                    19.9           16.2           18.8            15.4           19.4           13.2
Proprietary                                                  19.5           30.2           18.9            25.5           19.4           23.2
All schools                                                  10.5%          11.8%          10.9%           10.9%          10.2%           9.9%
                                         Notes: Default rates for FDLP schools are the percentage of FFELP borrowers who (1) attended
                                         schools participating in FDLP as of October 1996, (2) entered repayment in the cohort fiscal year,
                                         and (3) defaulted by the end of the following fiscal year. The rates for FFELP schools are for
                                         students attending schools that were not FDLP participants as of October 1996, but were in
                                         FFELP or FDLP as of the Department’s calculation of cohort default rates published in
                                         February 1996. The cohort rates reflect the Department’s addenda to its published rates, but not
                                         its subsequent revisions to schools’ default rates.

                                         Default rate data were not available for some schools either because they had no former students
                                         with loans entering repayment in the cohort years or because the schools were participants in
                                         neither FFELP nor FDLP as of the publication of the default rate data.




                                         Page 20                                               GAO/HEHS-97-45 FDLP and FFELP Schools
                                     Appendix II
                                     Selected Information on FDLP and FFELP
                                     Schools




Table II.10: FDLP Participation by
State, as of October 1996                                                                                FDLP schools as
                                                                                                          a percentage of
                                     State/territory              FDLP schoolsa         Total schoolsb       total schools
                                     Alabama                                   21                   84                 25%
                                     Alaska                                    2                     9                 22
                                     Arizona                                   41                   85                 48
                                     Arkansas                                  7                    84                  8
                                     California                               218                  586                 37
                                     Colorado                                  30                   90                 33
                                     Connecticut                               25                   98                 26
                                     Delaware                                  5                    12                 42
                                     District of Columbia                      6                    23                 26
                                     Florida                                   53                  227                 23
                                     Georgia                                   46                  147                 31
                                     Hawaii                                    1                    20                  5
                                     Idaho                                     10                   25                 40
                                     Illinois                                  80                  265                 30
                                     Indiana                                   28                  121                 23
                                     Iowa                                      41                   92                 45
                                     Kansas                                    20                   84                 24
                                     Kentucky                                  41                  178                 23
                                     Louisiana                                 25                  132                 19
                                     Maine                                     10                   43                 23
                                     Maryland                                  36                   90                 40
                                     Massachusetts                             58                  193                 30
                                     Michigan                                  49                  182                 27
                                     Minnesota                                 25                  117                 21
                                     Mississippi                               8                    60                 13
                                     Missouri                                  31                  192                 16
                                     Montana                                   3                    34                  9
                                     Nebraska                                  10                   55                 18
                                     Nevada                                    6                    20                 30
                                     New Hampshire                             4                    37                 11
                                     New Jersey                                54                  140                 39
                                     New Mexico                                9                    39                 23
                                     New York                                 113                  467                 24
                                     North Carolina                            32                  147                 22
                                     North Dakota                              5                    31                 16
                                     Ohio                                      69                  284                 24
                                                                                                               (continued)



                                     Page 21                                        GAO/HEHS-97-45 FDLP and FFELP Schools
Appendix II
Selected Information on FDLP and FFELP
Schools




                                                                                FDLP schools as
                                                                                 a percentage of
State/territory                     FDLP schoolsa           Total schoolsb          total schools
Oklahoma                                          11                     115                       10
Oregon                                            24                      77                       31
Pacific territories                                 1                      6                       17
Pennsylvania                                      75                     416                       18
Puerto Rico                                       35                     110                       32
Rhode Island                                      10                      28                       36
South Carolina                                    17                      79                       22
South Dakota                                        2                     30                        7
Tennessee                                         24                     148                       16
Texas                                             72                     317                       23
Utah                                                5                     44                       11
Vermont                                             6                     28                       21
Virgin Islands                                      1                      1                       100
Virginia                                          48                     145                       33
Washington                                        21                      93                       23
West Virginia                                     24                      74                       32
Wisconsin                                         22                      93                       24
Wyoming                                             2                     15                       13
Total                                          1,622                  6,312                        26%

a
  Schools eligible to participate in FDLP; 90 of these were schools that Department records show
had no fiscal year 1995 FFELP or FDLP loans.
b
 Schools eligible to participate in FFELP or FDLP; 1,152 of these were FFELP schools that
Department records show had no fiscal year 1995 loans.




Page 22                                                 GAO/HEHS-97-45 FDLP and FFELP Schools
                                         Appendix II
                                         Selected Information on FDLP and FFELP
                                         Schools




Table II.11: Fiscal Year 1995 FDLP and
FFELP Loan Volume at FDLP and            Dollars in millions
FFELP Schools, by State, as of                                    Amount of       Amount of                   Amount at FDLP
October 1996                                                        loans at        loans at   Total fiscal      schools as a
                                                                       FDLP           FFELP     year 1995       percentage of
                                         State/territorya          schoolsb        schoolsb         loansc              totald
                                         Alabama                        $220           $110          $330                  67%
                                         Alaska                             2            14             16                 10
                                         Arizona                         269            326            596                 45
                                         Arkansas                         17            139            157                 11
                                         California                      964          1,542          2,506                 39
                                         Colorado                        256            224            480                 53
                                         Connecticut                      62            227            289                 22
                                         Delaware                         23             10             33                 71
                                         District of Columbia            212            135            347                 61
                                         Florida                         247            825          1,072                 23
                                         Georgia                         344            294            638                 54
                                                                             e
                                         Hawaii                             0            36             37                  1
                                         Idaho                           108             25            134                 81
                                         Illinois                        421            572            993                 42
                                         Indiana                         199            434            633                 32
                                         Iowa                            276            176            453                 61
                                         Kansas                          127            178            305                 42
                                         Kentucky                        137            172            309                 44
                                         Louisiana                       104            416            520                 20
                                         Maine                            34             85            118                 28
                                         Maryland                        225            121            346                 65
                                         Massachusetts                   494            463            958                 52
                                         Michigan                        570            275            845                 67
                                         Minnesota                       158            356            513                 31
                                         Mississippi                      14            203            216                  6
                                         Missouri                        260            379            639                 41
                                         Montana                          32             80            112                 29
                                         Nebraska                         59            165            224                 26
                                         Nevada                           25             26             51                 49
                                         New Hampshire                      8           153            161                  5
                                         New Jersey                      293            139            432                 68
                                         New Mexico                       53             73            127                 42
                                         New York                        921          1,380          2,301                 40
                                         North Carolina                  111            370            481                 23
                                         North Dakota                       4            96            100                  4
                                                                                                                   (continued)


                                         Page 23                                      GAO/HEHS-97-45 FDLP and FFELP Schools
Appendix II
Selected Information on FDLP and FFELP
Schools




Dollars in millions
                                  Amount of        Amount of                         Amount at FDLP
                                    loans at         loans at       Total fiscal        schools as a
                                       FDLP            FFELP         year 1995         percentage of
State/territorya                   schoolsb         schoolsb             loansc                totald
Ohio                                       524              623              1,147                46
Oklahoma                                    71              282               353                 20
Oregon                                     178              130               308                 58
                                               e                                 e
Pacific territories                           0                0                0                  0
Pennsylvania                               174            1,452              1,626                11
Puerto Rico                                106               25               131                 81
Rhode Island                                93              105               198                 47
South Carolina                              69              249               318                 22
South Dakota                                  8             111               119                  7
Tennessee                                  137              325               462                 30
Texas                                      230            1,158              1,388                17
Utah                                        16              166               181                  9
Vermont                                     40               67               106                 37
Virgin Islands                                1                0                1                100
Virginia                                   428              211               638                 67
Washington                                 220              357               577                 38
West Virginia                              122               43               166                 74
Wisconsin                                  148              332               480                 31
Wyoming                                       0e             45                45                  1
         c
Total                                  $9,815          $15,900          $25,715                   38%

a
    State or territory in which the main campus of each school is located.
b
    Total of FDLP and FFELP loans.
c
    The sum of figures shown may not equal the total because of rounding.
d
    The numbers may not equal the percentage shown because of rounding.
e
    Less than $500,000.




Page 24                                                  GAO/HEHS-97-45 FDLP and FFELP Schools
                                          Appendix II
                                          Selected Information on FDLP and FFELP
                                          Schools




Table II.12: Loan Program Participation
as of October 1996 for the 100 Schools                                                        Preliminary
With Largest Enrollments in Fall 1995                                                            fall 1995     FDLP        FFELP
                                          Rank        School                                  enrollmenta    schoolb      schoolc
                                          1           University of Minnesota-Twin Cities          51,445          X
                                          2           Ohio State University-Main
                                                      Campus                                       48,676          X
                                          3           The University of Texas at Austin            47,905                       X
                                          4           Miami-Dade Community College                 47,060                       X
                                          5           Arizona State University-Main
                                                      Campus                                       42,040          X
                                          6           Texas A & M University                       41,790                       X
                                          7           Michigan State University                    40,647          X
                                          8           Pennsylvania State
                                                      University-Main Campus                       39,646                       X
                                          9           Houston Community College
                                                      System                                       39,541                       X
                                          10          University of Florida                        39,412          X
                                          11          University of Wisconsin-Madison              39,005                       X
                                          12          University of Illinois at Urbana             38,420          X
                                          13          Northern Virginia Community
                                                      College                                      37,144          X
                                          14          University of Michigan-Ann Arbor             36,687          X
                                          15          Purdue University-Main Campus                36,427                       X
                                          16          University of South Florida                  36,142                       X
                                          17          New York University                          35,835          X
                                          18          Indiana University-Bloomington               35,063          X
                                          19          University of Arizona                        34,777                       X
                                          20          University of California-
                                                      Los Angeles                                  34,713                       X
                                          21          University of Washington                     33,996          X
                                          22          Rutgers University-New Brunswick             33,773          X
                                          23          University of Maryland College
                                                      Park Campus                                  32,908          X
                                          24          Wayne State University                       32,149          X
                                          25          Brigham Young University                     31,300                       X
                                          26          University of Houston-University
                                                      Park                                         30,766                       X
                                          27          Florida State University                     30,155                       X
                                          28          University of Georgia                        30,149          X
                                          29          College of Du Page                           29,888                       X
                                          30          University of California-Berkeley            29,630          X
                                          31          San Diego State University                   29,350          X
                                                                                                                       (continued)


                                          Page 25                                         GAO/HEHS-97-45 FDLP and FFELP Schools
Appendix II
Selected Information on FDLP and FFELP
Schools




                                                     Preliminary
                                                        fall 1995     FDLP        FFELP
Rank        School                                   enrollmenta    schoolb      schoolc
32          Boston University                             29,132          X
33          Temple University                             29,028                       X
34          University of Cincinnati-Main
            Campus                                        28,373                       X
35          North Carolina State University at
            Raleigh                                       28,250                       X
36          Florida International University              28,171                       X
37          University of Iowa                            28,052          X
38          University of Southern California             27,971                       X
39          Pima Community College                        27,866          X
40          University of Colorado at Boulder             27,624          X
41          University of Utah                            27,137                       X
42          Indiana University-Purdue
            University-Indianapolis                       26,939                       X
43          San Francisco State University                26,791          X
44          Louisiana State University and
            A & M College and Hebert Law
            Center                                        26,573                       X
45          University of Central Florida                 26,556                       X
46          Portland Community College                    26,540                       X
47          Western Michigan University                   26,537          X
48          California State University-Long
            Beach                                         26,403                       X
49          University of South Carolina at
            Columbia                                      26,346                       X
50          Colorado State University                     26,340          X
51          University of Pittsburgh-Main
            Campus                                        26,083                       X
52          City College of San Francisco                 26,019                       X
53          San Jose State University                     25,997                       X
54          Tarrant County Junior College                 25,953          X
55          Oakland Community College                     25,913                       X
56          Broward Community College                     25,738                       X
57          University of Tennessee-Knoxville             25,723                       X
58          Austin Community College                      25,620                       X
59          Virginia Polytechnic Institute and
            State University                              25,492          X
60          University of
            Massachusetts-Amherst                         25,267          X
61          Macomb Community College                      25,176          X
                                                                              (continued)


Page 26                                          GAO/HEHS-97-45 FDLP and FFELP Schools
Appendix II
Selected Information on FDLP and FFELP
Schools




                                                    Preliminary
                                                       fall 1995     FDLP        FFELP
Rank        School                                  enrollmenta    schoolb      schoolc
62          University of North Texas                    25,114                       X
63          University of Kansas-Main
            Campus                                       25,036          X
64          California State
            University-Northridge                        25,015                       X
65          University of Illinois at Chicago            24,870          X
66          Harvard University                           24,677          X
67          Iowa State University                        24,673          X
68          Northeastern University                      24,605                       X
69          University of New Mexico-Main
            Campus                                       24,605          X
70          State University of New York at
            Buffalo                                      24,493          X
71          University of North Carolina at
            Chapel Hill                                  24,439                       X
72          University of Nebraska at Lincoln            24,320          X
73          Georgia State University                     24,274          X
74          Texas Tech University                        24,185                       X
75          George Mason University                      24,172          X
76          University of Kentucky                       23,794          X
77          University of Akron Main Campus              23,640                       X
78          Central Michigan University                  23,575          X
79          Valencia Community College                   23,569                       X
80          Eastern Michigan University                  23,142                       X
81          University of California-Davis               23,091          X
82          California State
            University-Sacramento                        22,796                       X
83          Cuyahoga Community College
            District                                     22,785          X
84          California State
            University-Fullerton                         22,604          X
85          De Anza College                              22,545                       X
86          University of Connecticut                    22,471                       X
87          Southern Illinois
            University-Carbondale                        22,418          X
88          University of Missouri-Columbia              22,356          X
89          University of Oklahoma-Norman
            Campus                                       22,299                       X
90          Northern Illinois University                 22,218                       X
91          Mt. San Antonio College                      22,202          X
                                                                             (continued)


Page 27                                         GAO/HEHS-97-45 FDLP and FFELP Schools
           Appendix II
           Selected Information on FDLP and FFELP
           Schools




                                                                          Preliminary
                                                                             fall 1995           FDLP     FFELP
           Rank              School                                       enrollmenta          schoolb   schoolc
           92                University of Pennsylvania                         22,148                          X
           93                Auburn University-Main Campus                      22,122              X
           94                The University of Texas at
                             Arlington                                          22,121                          X
           95                University of Toledo                               21,991              X
           96                Milwaukee Area Technical College                   21,903                          X
           97                University of Wisconsin-Milwaukee                  21,891              X
           98                El Paso Community College                          21,856                          X
           99                Nassau Community College                           21,737              X
           100               University of Virginia-Main
                             Campus                                             21,728              X

           Note: Not all enrolled students receive student loans. In aggregate during fiscal year 1995,
           students at the FDLP schools listed above received about $3.1 billion in loans, including
           $2.07 billion in FDLP loans and $1.06 billion in FFELP loans. The students at FFELP schools listed
           received about $2.63 billion in FFELP loans.
           a
               Excludes students not enrolled for credit.
           b
               Schools that the Department determined to be eligible to participate in FDLP.
           c
               Schools that Department records show to be eligible to participate in FFELP, but not in FDLP.




(104873)   Page 28                                                 GAO/HEHS-97-45 FDLP and FFELP Schools
Ordering Information

The first copy of each GAO report and testimony is free.
Additional copies are $2 each. Orders should be sent to the
following address, accompanied by a check or money order
made out to the Superintendent of Documents, when
necessary. VISA and MasterCard credit cards are accepted, also.
Orders for 100 or more copies to be mailed to a single address
are discounted 25 percent.

Orders by mail:

U.S. General Accounting Office
P.O. Box 6015
Gaithersburg, MD 20884-6015

or visit:

Room 1100
700 4th St. NW (corner of 4th and G Sts. NW)
U.S. General Accounting Office
Washington, DC

Orders may also be placed by calling (202) 512-6000
or by using fax number (301) 258-4066, or TDD (301) 413-0006.

Each day, GAO issues a list of newly available reports and
testimony. To receive facsimile copies of the daily list or any
list from the past 30 days, please call (202) 512-6000 using a
touchtone phone. A recorded menu will provide information on
how to obtain these lists.

For information on how to access GAO reports on the INTERNET,
send an e-mail message with "info" in the body to:

info@www.gao.gov

or visit GAO’s World Wide Web Home Page at:

http://www.gao.gov




PRINTED ON    RECYCLED PAPER
United States                       Bulk Rate
General Accounting Office      Postage & Fees Paid
Washington, D.C. 20548-0001           GAO
                                 Permit No. G100
Official Business
Penalty for Private Use $300

Address Correction Requested