Student Financial Aid Information: Systems Architecture Needed to Improve
Programs' Efficiency (Letter Report, 07/29/97, GAO/AIMD-97-122).
Pursuant to a congressional request, GAO assessed the Department of
Education's progress toward integrating the National Student Loan Data
System (NSLDS) with other student financial aid data systems, as
required by law.
GAO noted that: (1) the Department of Education has made limited
progress in integrating NSLDS with the other student financial aid data
systems that support title IV programs; (2) neither NSLDS nor the other
systems were designed for efficient access to reliable student financial
aid information; (3) many of the systems are incompatible and lack data
standards and common identifiers; (4) inhibiting movement toward a fully
functional, real-time, intergrated system is the absence of a systems
architecture--a structure for effectively incorporating major systems
development into an existing information systems environment; (5) the
Department to date has not devoted the time or effort necessary to
develop such an architecture; hence, its past and current systems
development activities have no single, guiding framework; (6) without a
systems architecture and the ability to easily integrate its systems,
the Department continues to acquire independent systems to support
specific student financial aid programs--programs that cannot easily
share information; (7) accordingly, the cost of developing and
maintaining these stand-alone systems continues to mount; and (8) while
developing such stand-alone systems has served immediate program needs
on a limited basis, this approach undermines the goal of sharing student
financial aid information across programs.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: AIMD-97-122
TITLE: Student Financial Aid Information: Systems Architecture
Needed to Improve Programs' Efficiency
DATE: 07/29/97
SUBJECT: Systems design
Government guaranteed loans
Student loans
Higher education
Student financial aid
Internal controls
Risk management
Systems compatibility
Cost control
Loan accounting systems
IDENTIFIER: Dept. of Education National Student Loan Data System
Dept. of Education Title IV Program
Federal Family Education Loan Program
William D. Ford Federal Direct Loan Program
Pell Grant
Dept. of Education Perkins Student Loan Program
Dept. of Education Easy Access for Students and
Institutions Project
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Cover
================================================================ COVER
Report to Congressional Requesters
July 1997
STUDENT FINANCIAL AID INFORMATION
- SYSTEMS ARCHITECTURE NEEDED TO
IMPROVE PROGRAMS' EFFICIENCY
GAO/AIMD-97-122
Student Financial Aid Information
(511217)
Abbreviations
=============================================================== ABBREV
ADP - automated data processing
CBS - Campus-based System
CIO - chief information officer
CPS - Central Processing System
EASI - Easy Access for Students and Institutions
FDLP - Federal Direct Loan Program
FFELP[S] - Federal Family Education Loan Program [System]
HEA - Higher Education Act
HR - high risk
IDS - Institutional Data System
MDES - multiple data-entry systems
NSLDS - National Student Loan Data System
OIG - Office of Inspector General
OPE - Office of Postsecondary Education
PEPS - Postsecondary Education Participants System
PGRFMS - Pell Grant Recipient and Financial Management System
TIVWAN - Title IV Wide Area Network
FFELP -
Letter
=============================================================== LETTER
B-277329
July 29, 1997
The Honorable James M. Jeffords
Chairman, Committee on Labor and Human Resources
United States Senate
The Honorable William F. Goodling
Chairman, Committee on Education and the Workforce
House of Representatives
The Honorable Howard McKeon
Chairman, Subcommittee on Postsecondary Education,
Training and Life-Long Learning
Committee on Education and the Workforce
House of Representatives
As requested, we are reporting to you on the Department of
Education's National Student Loan Data System (NSLDS). This national
database on title IV (student financial aid) programs\1 is designed
to track loan and grant data, provide a research database, and
support functions such as prescreening of aid applicants for
eligibility and student enrollment status. Because of concerns
surrounding the Department's ability to improve the reliability and
efficiency of student financial aid information and delivery systems,
you asked that we assess its progress toward integrating NSLDS with
other student financial aid databases, as required by law. Appendix
I describes our objective, scope, and methodology in more detail.
--------------------
\1 Title IV of the Higher Education Act of 1965, as amended. These
programs make billions of dollars in loans and grants available to
postsecondary education students each year.
RESULTS IN BRIEF
------------------------------------------------------------ Letter :1
The Department of Education has made limited progress in integrating
NSLDS with the other student financial aid databases that support
title IV programs. Neither NSLDS nor the other systems were designed
for efficient access to reliable student financial aid information.
Many of the systems are incompatible and lack data standards and
common identifiers. Inhibiting movement toward a fully functional,
real-time, integrated system is the absence of a systems
architecture--a structure for effectively incorporating major systems
development into an existing information systems environment. The
Department to date has not devoted the time or effort necessary to
develop such an architecture; hence, its past and current systems
development activities have no single, guiding framework.
Without a systems architecture and the ability to easily integrate
its systems, the Department continues to acquire independent systems
to support specific student financial aid programs--programs that
cannot easily share information. Accordingly, the cost of developing
and maintaining these stand-alone systems continues to mount. While
developing such stand-alone systems has served immediate program
needs on a limited basis, this approach undermines the goal of
sharing student financial aid information across programs.
BACKGROUND
------------------------------------------------------------ Letter :2
The Department of Education's Office of Postsecondary Education (OPE)
administers student financial aid programs under title IV of the
Higher Education Act of 1965, as amended (HEA). Through these
programs, students have access to billions of dollars in loans and
grants for postsecondary education each year. Four major types of
student aid are currently in use: the Federal Family Education Loan
Program (FFELP),\2 the William D. Ford Federal Direct Loan Program
(FDLP), the Federal Pell Grant Program, and campus-based programs.\3
These programs together will make available more than $47 billion to
about 8 million students during the 1998-99 academic year--about 80
percent of it in student loans.
Prior to the 5-year phase-in of FDLP, the two largest postsecondary
student aid programs were FFELP and the Pell Grant Program. FFELP
provides student loans, through private lending institutions, that
are guaranteed against default by approximately 36 guaranty
agencies\4 and insured by the federal government. The Pell Grant
Program provides grants to economically disadvantaged students.
Over the years, both FFELP and the Pell Grant Program have
encountered waste, fraud, and abuse. The structure of FFELP creates
the potential for large losses due to abuse, given the limited
financial risks for program participants--schools, lenders, and
guaranty agencies--as well as the unreliable student aid data
generally provided by guaranty agencies. In fiscal year 1995, the
federal government paid out over $2.5 billion to make good its
guarantee on defaulted student loans. The Pell program has also
experienced abuse, such as students' receiving grants while attending
two or more schools concurrently.
As we recently reported,\5 the Department's loan programs continue to
be at risk for waste, fraud, and abuse. The Department has not yet
succeeded in protecting the financial interests of taxpayers and has
not resolved long-standing management problems. For example,
inadequate Department oversight contributed to abuses on the part of
some schools participating in federal student aid programs. These
abuses include instances in which schools received Pell grant funds
for ineligible students.
In addition, the Department's data quality and management controls
are inadequate. For example, because poor quality and unreliable
FFELP student loan data remain in the Department's systems, Education
staff cannot obtain complete, accurate, and reliable FFELP data
necessary for reporting on its financial position. The Department's
Office of Inspector General was unable to express an opinion on its
fiscal year 1994 FFELP principal financial statements, taken as a
whole, because student loan data on which the Department based its
expected costs incurred on outstanding guaranteed loans were not
reliable. For the same reason, Education received a disclaimer of
audit opinion on the 1995 financial statements. The Department's
chief financial officer, in Education's March 1997 annual
accountability report (covering fiscal year 1996), presents unaudited
1996 financial statements, and says that the audited statements--with
auditor's report--should be available about July 31, 1997.
In 1986 and 1992, the Congress tried to help overcome these
long-standing problems. In reauthorizing the title IV programs, the
HEA amendments of 1986 authorized the Secretary of Education to
establish NSLDS to ensure accurate information on student loan
indebtedness and institutional lending practices, and to improve
compliance with repayment and loan-limitation provisions. Because
the 1986 amendments contained a provision that the Department could
not require guaranty agencies to use the system before guaranteeing
new loans, the system was not developed. The 1989 Budget
Reconciliation Act, however, allowed the Department to require
guaranty agencies to use such a system before approving new loans.
The 1992 reauthorization amendments expanded the scope of NSLDS by
requiring the Department to integrate NSLDS with databases of the
other title IV systems. The 1992 amendments also stated that NSLDS
should allow for the monitoring of information on student enrollment
status, current loan holders and servicers, and internship and
residency status. They also said that borrowers should be able to
use the system to identify current loan holders and servicers.
In response to these legislative mandates, in January 1993 the
Department awarded a 5-year, $39-million contract for development and
maintenance of NSLDS. The system was aimed at providing information
on students across programmatic boundaries. Loan information was to
be transmitted to NSLDS on a regular basis by schools, guaranty
agencies, and other Departmental databases. In so doing, Education
hoped that NSLDS would serve the needs of students and schools, as
well as guaranty agencies and the Department. It was planned to be
used to assist in determining students' aid eligibility throughout
repayment periods and also serve as an overall financial aid history
file on program participants.
Education also anticipated that NSLDS would enable it to help reduce
the number of loans given to ineligible students. A student in
default on any previous student loan is generally ineligible to
receive additional federal aid until the default is resolved.
Education planned for NSLDS to identify ineligible applicants by
checking for defaults on previous student loans. The ability to
check that cumulative loan limits were not exceeded was also
envisioned for NSLDS, along with verification that the student did
not receive a prior Pell Grant overpayment.
The Department reports that as of February 6, 1997, NSLDS contained
about 71 million open loan and grant records from guaranty agencies
(FFELP), direct loan servicers (FDLP), and schools (campus-based,
i.e., Perkins and the Pell program). As figure 1 illustrates, a
significant portion of data stored in NSLDS--about 70
percent--relates to FFELP guaranteed loans.
Figure 1: Approximate Number
and Percentage of Open Loan and
Grant Records in NSLDS by
Program, as of February 6, 1997
(See figure in printed
edition.)
Source: Department of Education.
To help federal agencies better manage information systems projects
such as NSLDS, the Congress recently enacted the Clinger-Cohen Act of
1996.\6 In response to the act's mandates, the Department of
Education has established the position of chief information officer
(CIO). While day-to-day management of student financial aid
information systems resides with the Office of Postsecondary
Education, the CIO provides technical advice on the direction of the
Department's information resources.
--------------------
\2 FFELP was formerly the Guaranteed and Stafford Student Loan
programs.
\3 The campus-based programs include the Federal Work-Study Program,
the Federal Perkins Loan Program, and the Federal Supplemental
Educational Opportunity Grant Program.
\4 State and private nonprofit guaranty agencies act as agents of the
federal government, providing a variety of services, including
payment of defaulted claims, collection of some defaulted loans,
default-avoidance activities, and counseling to schools and students.
\5 High-Risk Series: Student Financial Aid (GAO/HR-97-11, February
1997).
\6 The Clinger-Cohen Act of 1996 (formerly known as the Information
Technology Management Reform Act of 1996), P.L. 104-106, Division E.
EDUCATION HAS MADE LIMITED
PROGRESS IN INTEGRATING NSLDS
WITH OTHER DATABASES
------------------------------------------------------------ Letter :3
In responding to the HEA amendments of 1992, the Department of
Education implemented an approach that falls short of full
integration. The Department opted to establish NSLDS as a data
repository that would only receive and store information from other
title IV systems. However, the lack of uniformity in how the systems
handle their information--no common student or institutional
identifiers or data standards--has complicated data matching between
systems. Hence, NSLDS cannot effectively be updated without
expensive conversion "workaround" programs.
Past Departmental studies, as well as those conducted by the Advisory
Committee on Student Financial Assistance,\7 have consistently
addressed the need for integration\8 of student financial aid
databases, citing reduced management efficiency, compromised system
integrity, and escalating costs as resulting from the lack of
integration. The benefits of integration are many, and include such
areas as improved quality through reduced development changes,
streamlined operations, formalized communications, and cost
reductions through increased productivity and decreased data
redundancy. The National Institute of Standards and Technology
measures the effectiveness of integration by assessing "whether a
user can get the right data, at the right place, at the right time,
in the right form, and at the right cost."\9
In recognition of the need for integration to address long-standing
problems and improve the availability and quality of data on title IV
program participants, the 1992 HEA amendments required that the
Department, by January 1, 1994, integrate NSLDS with other databases
containing information on student financial aid program participants.
To assist in achieving this integration, the amendments also required
the Department to (1) establish common identifiers so that codes used
to identify institutions and students were consistent across
programs, and (2) standardize data reporting formats, including
definitions of terms, to permit the direct comparison of data.
--------------------
\7 The Congress created the Advisory Committee on Student Financial
Assistance when it enacted the HEA amendments of 1986. The Advisory
Committee serves as an independent public advisory committee to the
Department of Education and the Congress.
\8 Information integration is defined by the National Institute of
Standards and Technology as establishment of the appropriate computer
hardware/software, methodology, and organizational environment to
provide a unified and shared information management capability for a
complex business enterprise (Information Management Directions: The
Information Challenge, special publication 500-167, September 1989).
\9 Special publication 500-167, September 1989.
DEPARTMENT'S APPROACH FALLS
SHORT OF INTEGRATION
---------------------------------------------------------- Letter :3.1
In response to the HEA amendments, the Department, through a
contractor, designed and implemented NSLDS to receive and store
student financial aid data from title IV programs in one central
database. At the same time, the Department maintains multiple
internal program-specific systems, many of which individually store
the same data for their respective title IV programs. Under this
approach, each system would periodically supply NSLDS with data from
each of its respective title IV programs.
The Department's implementation of this approach has not achieved
full integration because it has not created a seamless information
exchange environment that would allow for a complete, accurate,
real-time student financial aid record. Preventing this is the fact
that most of the title IV systems and NSLDS are not readily
compatible--they cannot easily communicate with each other. These
systems, operated by several different contractors, have a variety of
architectural characteristics, including different types of hardware,
operating systems, application languages, and database management
systems. In addition to the Department's internal systems, thousands
of schools or their agents, and the numerous guaranty agencies, also
use disparate systems to send data to NSLDS.
With these differing architectural characteristics, accommodations
must be made through the use of computer programs to bridge the gap
between NSLDS and the other data providers' systems by converting
data into mutually recognizable formats. For example, in order for
most of the Department's major systems to send information to NSLDS,
each data provider must first develop and execute software to extract
data from its respective databases. The data must then be processed
by complex formatting, editing, and error correction programs
specifically designed for each data provider type before NSLDS can be
updated. Developing and maintaining these programs is work that may
itself introduce errors and would not be required in a fully
integrated environment. Education and its data providers have over
300 data formatting and editing programs that are subject to
potential modification as new requirements are identified. This has
contributed to escalation in the estimated cost of the 5-year
contract for NSLDS--from the original $39 million estimate to now
about $83 million. Figure 2 shows the increase in estimated costs.
Figure 2: Escalation of NSLDS
Contract Costs
(See figure in printed
edition.)
Source: Department of Education.
Department officials acknowledge that integrating NSLDS and other
title IV systems has not been fully achieved. They believe, however,
that given the complexities of the title IV environment and statutory
requirements, they had little time to consider viable alternatives in
designing and implementing NSLDS.
COMMON IDENTIFIERS HAVE NOT
BEEN ESTABLISHED
---------------------------------------------------------- Letter :3.2
The use of common identifiers or data naming conventions across
systems is well established as an aid to data sharing and
understandability. However, the Department has not fully implemented
the use of common identifiers for students and institutions, as
required by law. This lack of common identifiers makes it difficult
to track students across programs. All applicants for federal
student aid are required by law to provide their Social Security
numbers, which the Department considers its common student
identifier. Yet positive identification of student records across
systems is still a cumbersome process because each system requires
additional and often different data fields beyond the Social Security
number to access records. For example, to identify, access, and
update a specific student record, systems use inconsistent
combinations of various data elements, such as date of birth and the
first two to three letters of either the first or last name.
Identifying institutions can also be problematic because multiple
identifiers are often used. For example, institutions may be
assigned different identification numbers for each title IV program
in which its students participate. Despite the 1992 HEA amendments'
requirement for common institutional identifiers by July 1, 1993,
current Department plans do not call for the development and
implementation of such common identifiers until the 1999-2000
academic year.
LACK OF TITLE IV DATA
STANDARDS COMPLICATES DATA
MATCHING
---------------------------------------------------------- Letter :3.3
Data standards are used to govern the conventions for identifying,
naming, and formatting data. Having such standards in place helps
ensure that the data being collected and maintained within an
organization are structured and stored so as to be accessible,
understandable, and comparable --meaning the exact same thing--to
everyone in the organization.
Although the 1992 HEA amendments required Education to establish
standard reporting formats and data definitions, the Department has
only partially done so. Specifically, the Department has not
established a common data dictionary for its title IV programs.
Instead, while each program and supporting system uses the reporting
formats specified for NSLDS, the Department permits each program to
use its own data dictionary\10 for its own system. One example of
how the lack of data standards can affect program operations can be
seen in the differences in how student enrollment status is stored in
NSLDS, compared with how it is stored in the system that supports the
Pell Grant program. Properly determining enrollment status is
important because students generally begin repaying loans following a
6-month grace period after leaving school. Because NSLDS and the
Pell system report enrollment status in different formats--alpha
versus numeric--and use different definitions, exact comparisons
cannot be made and queries may well produce inconsistent responses;
this can lead to misinterpretations of a student's true enrollment
status. Problems such as these resulting from data inconsistencies
between systems and NSLDS can take school officials weeks or months
to resolve--if they are even detected.
Another example of inconsistencies linked to the lack of data
standards involves conflicts in the acceptability of data formats
between NSLDS and the software provided by the Department for data
exchange.\11 While the NSLDS software accepts either past, present,
or future dates, the exchange software's edits were designed to
reject dates that have already passed--therefore not allowing a
roster to be sent to NSLDS. This problem has made it difficult for
schools to process students' enrollment status information or update
NSLDS accurately. In order to process rosters for students with past
graduation dates (e.g., graduate students), schools were instructed
to insert fictitious future graduation dates in order to pass the
exchange software edit. The Department has agreed to pay an
additional $343,000 in NSLDS labor costs for temporary workaround
software solutions to correct design conflicts between the exchange
software and NSLDS.
The lack of data standards also contributes to problems with data
quality and reliability. For example, several of the school
officials we spoke with chose not to use the NSLDS electronic
financial aid transcript function to obtain student financial aid
history information on transfer students. These officials still
request paper transcripts from the student's previous school(s)
because they consider the electronic data unreliable.
The Department has long recognized the significant problems with
title IV data reliability. It has reported data unreliability as a
material weakness under the Federal Managers' Financial Integrity
Act. Plans are now underway to address this issue through a major
project initiated last December to reconcile NSLDS data with data in
the program-specific databases. This effort started with the
guaranty agencies--the largest group of data providers in terms of
loan volume. The Department then plans to reconcile data coming from
its internal systems, then the schools that report Perkins loan
data--all of which are also problematic. For example, the 2,700
schools that participate in the Perkins Loan Program are also
required to provide data to NSLDS; however, not all schools yet do
so--about 7 percent do not.
--------------------
\10 A data dictionary is a repository of information describing the
characteristics of data used to design, monitor, document, protect,
and control data in information systems and databases.
\11 This software, known as EDExpress, enables schools to initiate
student aid applications and perform edits and corrections on
applicant data, including student enrollment status. It links
schools to communications software that provides access to NSLDS.
SYSTEMS ARCHITECTURE ESSENTIAL
TO OVERCOMING LACK OF
INTEGRATION
------------------------------------------------------------ Letter :4
As computer-based information systems have become larger and more
complex over the last 10 years, the importance of and reliance on
what is called a systems architecture has correspondingly increased.
Simply put, an architecture is the blueprint to guide and constrain
the development and evolution of a collection of related systems.
This is done first in logical terms, such as defining the
organization's functions, providing high-level descriptions of its
information systems and their interrelationships, and specifying how
and where information flows. Second, this blueprint explains
operations in technical terms, such as specifying hardware, software,
data communications, security, and performance characteristics.
Figure 3 displays the key logical and technical components of a
systems architecture.
Figure 3: Key Logical and
Technical Components of a
Systems Architecture
(See figure in printed
edition.)
A systems architecture is important because, in guiding and
constraining a project's development or modernization, it can help
significantly to avoid inconsistent system design and development
decisions, and their concomitant increased costs and performance
shortfalls. Leading public and private organizations are using
systems architectures to guide mission-critical system acquisition,
development, and maintenance. The Congress has also recognized the
importance of such architectures in improving the effectiveness and
efficiency of federal information systems. The Clinger-Cohen Act of
1996 requires, among other provisions, that Department-level CIOs
develop, maintain, and facilitate the implementation of integrated
systems architectures.\12
Experts in academia have also championed the systems architecture
approach. The Software Engineering Institute of Pittsburgh's
Carnegie Mellon University includes the development and evolution of
a systems architecture as a key process area in its Systems
Engineering Capability Maturity Model.\13
Implementation of a systems architecture within Education could
dramatically help the Department overcome its continuing problems in
integrating NSLDS and the other title IV systems. For example, at
the logical level, the Department would get a clear picture of the
factors contributing to "stovepipe" design which inhibits movement of
information between systems. Then, at the technical level, reaching
agreement on data characteristics and standards, including
establishing a departmentwide data dictionary, would enable Education
to ensure that aggregated data in NSLDS are presented uniformly.
Further, since one of the purposes of the technical architecture is
to ensure that systems are interoperable,\14 having such an
architecture would reduce the continuing need for the Department to
implement expensive workarounds.
Despite the importance of having a systems architecture, the
Department of Education has not devoted the time or effort necessary
to develop such a blueprint. According to OPE officials, several
factors accounted for this, including the Department's focus on
responding to legislative mandates, and its lack--until recently--of
a CIO. The Department reports that work on a systems architecture
has begun; the technical portion of it has been drafted, and the
logical portion is planned for completion by June 30, 1998. Based on
our preliminary review of the Department's draft architecture, it
appears that Education is underestimating what is required to develop
and implement a departmentwide systems architecture. For example,
the complexity of the current computing environment will make it even
more difficult to implement a standard systems architecture across
the Department than what is described in the draft architecture. We
also note that the technical component is being drafted before the
logical is completed. The logical component should be developed
first because it is derived from a strategic information systems
planning process that clearly defines the organization's mission and
concepts of operations. It then defines the business functions
required to carry out the mission and the information needed to
perform the functions.
--------------------
\12 Section 5125.
\13 A Systems Engineering Capability Maturity Model,\SM Version 1.1,
Software Engineering Institute, Carnegie Mellon University
(SECMM-95-01, CMU/SEI-95-MM-003, November 1995).
\14 Interoperability is the ability of disparate systems to work
together efficiently and effectively over a network.
ACQUISITION OF STAND-ALONE
SYSTEMS CONTINUES WHILE
PROBLEMS AND COSTS MOUNT
------------------------------------------------------------ Letter :5
Despite the compelling need for a comprehensive systems architecture
that would enable the eventual integration of title IV systems, the
Department continues the practice of acquiring and maintaining
multiple, independent stovepipe systems through the use of multiple
contractors. The Department currently manages nine major systems,
supported by 16 contracts, to administer student financial aid
programs. Table 1 lists these systems. The systems range from
legacy mainframes, several originally developed over 15 years ago, to
a recently developed client-server system. Over the past 5 years the
information technology budget has tripled, costing the Department
over $1 billion. As illustrated in figure 4, the fiscal year 1994
actual costs to maintain these systems was $106 million, and is
expected to climb to $317 million in fiscal year 1998. For the most
part, these systems operate independently and cannot communicate or
share data directly with one another.
Figure 4: Student Financial
Aid Systems Costs From Fiscal
Year 1994 Through Fiscal Year
1998
(See figure in printed
edition.)
Source: Department of Education.
Table 1
Student Financial Aid Systems and
Contractors
Acrony
System m Contractor
------------------------------ ------ ------------------------------
Campus-based System CBS Universal Automation Labs,
Inc.
Central Processing System CPS National Computer Systems
Federal Direct Loan Program FDLP
--Loan Origination System Computer Data Systems, Inc.
(old)
Electronic Data Systems (new)
--Loan Servicing Systems
Computer Data Systems, Inc.
(old)
Electronic Data Systems (new)
Raytheon/E-Systems, Inc.
(new)
Education Loan Servicing
Center,
Inc. (new)
Federal Family Education Loan FFELPS Raytheon/E-Systems, Inc.
Program System\a
Multiple data-entry systems MDES INET and American College
Testing
National Student Loan Data NSLDS Raytheon/E-Systems, Inc.
System
Pell Grant Recipient and PGRFMS Planning Research Corp., Inc.
Financial Management System
Postsecondary Education PEPS Computer Business Machines,
Participants System\b Inc. (new), and Madentech
(old)
Project Easy Access for EASI Price Waterhouse
Students and Institutions\c
Title IV Wide Area Network TIVWAN National Computer Systems
----------------------------------------------------------------------
\a In support of the Federal Family Education Loan Program (FFELP),
the Department maintains an internal system--FFELPS (Federal Family
Education Loan Program System). This system is used to pay interest
and claims to lenders and guaranty agencies, and to support
collections on defaulted loans. FFELP is also supported by guaranty
agency systems, whose costs are not included in the Department's ADP
budget.
\b PEPS is replacing the Institutional Data System.
\c Project EASI is currently still in the developmental stage.
Source: Department of Education.
Many of Education's student financial aid systems, including NSLDS,
were developed independently over time by multiple contractors in
response to new functions, programs, or mandates, rather than as part
of a long-range system design strategy. As a consequence, a de
facto, highly heterogeneous systems environment has evolved that
relies heavily on contractors to develop and maintain critical
student financial aid systems whenever the need arises. In carrying
out this strategy, the Department has established and maintained
long-term arrangements with a limited number of contractors to
develop and operate these systems. These contractors operate the
systems in their own disparate hardware and software environments.
A recent example of the complexities and risks inherent in the
Department's stovepipe approach is the development of the systems
that support FDLP. As part of its planned systems design, the
Department now has multiple contractors performing various aspects of
the direct lending process. The Department recently awarded separate
contracts to three vendors for new stand-alone systems to service
direct loans. In addition to its original servicer, the total cost
of these four systems contracts is estimated to be at least $1.6
billion through fiscal year 2003. This will result in four different
servicing systems for the same loan program, creating opportunities
for problems stemming from a lack of system interoperability.
For many years, the Department has been advised that it should
migrate away from its stovepipe approach. The Advisory Committee on
Student Financial Assistance reported in March 1995, August 1995,
June 1996, and again in May 1997, that deficiencies in the overall
delivery system for student financial aid result from the lack of a
fully functional, title IV-wide recipient database that could
integrate all program operations.
The Department has stated that it recognizes the need for an
integrated title IV systems environment. In fact, in 1995 the
Department, under OPE's Office of Student Financial Assistance
Programs, began an initiative known as Project EASI. This project
was originally designed to focus on reengineering the Department's
current processes and developing an integrated system that included
all participants in the student financial aid community. However, as
we reported in February 1997,\15 Project EASI has had a checkered
past, has undergone a tentative start, and has been loosely defined.
In addition, top management's commitment to the project has been
uncertain. Accordingly, it is unclear whether the project will
achieve its original goal of process redesign and systems
integration.
--------------------
\15 GAO/HR-97-11, February 1997.
CONCLUSIONS
------------------------------------------------------------ Letter :6
The Department of Education continues its slow pace toward compliance
with the 1992 HEA amendments to integrate its student financial aid
information systems. Moreover, the Department will likely be unable
to correct long-standing problems resulting from a lack of
integration across its student financial aid systems until a sound
systems architecture is established and effectively implemented.
Further, unless this happens, problems and maintenance costs with its
nine separate information systems will probably escalate, as will the
likelihood of acquiring new stand-alone systems.
RECOMMENDATIONS
------------------------------------------------------------ Letter :7
Given the importance, cost, and magnitude of student financial aid
and the information systems structure needed to support this aid, we
recommend that the Secretary of Education direct the Department's
chief information officer to
-- develop and enforce a departmentwide systems architecture by
June 30, 1998, that includes, but is not limited to (1) a
high-level description of the organization's mission, functional
requirements, information requirements, systems, and information
flows among systems and (2) specific information technology and
communications standards and approaches that address critical
hardware, software, communications, data management, security,
and performance characteristics; and
-- ensure that the developed systems architecture addresses the
title IV systems integration, common identifiers, and data
standards deficiencies.
We also recommend that the Secretary of Education direct that as of
July 1, 1998, the Department's information technology investments
conform to the developed architecture and that funding for all
projects be predicated on such conformance; unless careful, thorough,
and documented analysis supports an exception.
AGENCY COMMENTS AND OUR
EVALUATION
------------------------------------------------------------ Letter :8
In its comments on a draft of this report, the Department of
Education agreed with our recommendation to establish a
departmentwide systems architecture within the next year. However,
Education stated that our observation that the Department has made
"limited progress" in integrating NSLDS with other title IV financial
aid systems fails to consider the complexities that faced NSLDS
developers and the funds saved. Indeed, it is the complexity of
Education's systems environment that highlights the need for the
systems architecture.
We believe the progress made by the Department in integrating its
student financial aid systems is limited. Schools still often rely
on paper documents to process financial aid loan applications,
students do not have real-time access to their loan status
information, and loan data are not reported to NSLDS in a prompt
manner. Although progress has been made in identifying applicants
who have previously defaulted and initial efforts have been made to
reconcile errors in NSLDS, the number of known errors in the system
remains significantly high. Further, the limited ability to share
data among systems has cost and efficiency consequences--both
critical factors in systems integration decisions. Thus, the lack of
integration results in lost opportunities to achieve programmatic
savings.
In many ways, the Department's student financial aid delivery system
is similar to functions performed by the banking industry, such as
making loans, reporting account status, and collecting payments. In
today's technological age, automated teller machines are commonplace
and heterogeneous financial institutions can deduct funds from
depositors' accounts anywhere in the world in seconds with a high
degree of accuracy. Given this environment, the gap between the
capabilities of the private sector and those of the Department of
Education is quite apparent.
It does appear that the Department is beginning to recognize the need
for an integrated title IV systems environment, as we stated in this
report. We are encouraged by the initiatives outlined in the
agency's response aimed at improving the operations of such a complex
heterogeneous systems environment. Coordination and continued
emphasis by top management of these far-reaching initiatives will be
essential to ensure their success. Our evaluation of the
Department's comments and their full text are reprinted as appendix
II.
---------------------------------------------------------- Letter :8.1
We are sending copies of this report to the Secretary of Education,
the Director of the Office of Management and Budget, appropriate
congressional committees, and other interested parties. Copies will
also be made available to others upon request. Please contact me at
(202) 512-6253 or by e-mail at [email protected] if you have
any questions concerning this report. Major contributors to the
report are listed in appendix III.
Joel C. Willemssen
Director, Information Resources Management
OBJECTIVE, SCOPE, AND METHODOLOGY
=========================================================== Appendix I
Integrating NSLDS with other title IV databases was mandated by the
Congress in 1992 in section 485B(g) of the Higher Education Act of
1965, as amended. Our objective was to assess the Department's
progress toward integrating NSLDS with other student financial aid
systems. To achieve our objective we examined NSLDS' history,
contract, and technical documentation related to the title IV
systems. In addition to examining records, in order to gain a better
understanding of the title IV environment, we conducted interviews
with Department officials responsible for title IV systems
integration, contract employees responsible for NSLDS development and
operations, and members of the education community affected by NSLDS.
To research NSLDS history, we examined sections of the 1986, 1989,
and 1992 amendments to the Higher Education Act. We analyzed those
sections related to the creation of NSLDS and its intended
functionality. In addition, we reviewed prior GAO, OIG, and
Department of Education internal reports showing deficiencies in
title IV programs and the need for an integrated title IV database.
We examined NSLDS contract files, and reviewed the original request
for proposals, statement of work, task orders through May 1997, and
contract amendments. In addition, we discussed the NSLDS contracting
process with officials from the Department's chief financial
officer's office.
The technical documentation we reviewed on the title IV systems
included data dictionaries from the major systems, NSLDS program code
and program manuals, and FDLP and FFELPS software programs, which
convert data from their respective databases into a format suitable
for input into NSLDS. To determine the number of programs used in
the NSLDS update process, we requested that Raytheon/E-Systems--the
responsible contractor--provide all programs used to update the NSLDS
database. Using a code analyzer developed by pi Technologies Group,
we scanned the NSLDS code to quantify the number of programs, lines
of code, and integration interoperability with other systems.
To assess the Department's actions to integrate NSLDS, we identified
the organizational components involved in developing and operating
NSLDS. We interviewed numerous officials from the Department's
Office of Postsecondary Education, including the director of the
program systems service and the director of the NSLDS division.
To assess NSLDS' current operations we interviewed staff from
Raytheon/E-Systems. We discussed the methods by which information is
transmitted into NSLDS, and how users gain access to this
information.
To assess the education community's perspectives on NSLDS and its
usefulness, we visited and interviewed officials from the Advisory
Committee on Student Financial Assistance, the National Student Loan
Clearinghouse, the National Council of Higher Education Loan
Programs, Inc.; and financial aid officials from four state colleges,
two universities, two community colleges, and one private college.
The schools were selected from a list of NSLDS schools and contacts
provided by the NSLDS contractor.
We performed our work at Department of Education headquarters in
Washington, D.C. We visited schools in Washington, D.C., Virginia,
and Maryland. Our work was performed from November 1996 through June
1997 in accordance with generally accepted government auditing
standards. The Department of Education provided written comments on
a draft of this report, which are included as appendix II.
(See figure in printed edition.)Appendix II
COMMENTS FROM THE DEPARTMENT OF
EDUCATION
=========================================================== Appendix I
(See figure in printed edition.)
The following are GAO's comments on the letter from the Department of
Education dated July 21, 1997.
GAO COMMENTS
1. We are encouraged by the Department's statement that the
Secretary is in full support of Project EASI. However, given the
project's problems to date, it is unclear whether Project EASI will
achieve its original goal of title IV process redesign and systems
integration. As we stated in our report, implementation of a systems
architecture within Education could dramatically help the Department
overcome its continuing problems in integrating its title IV systems.
2. In our report, we recognize the complexity of the heterogeneous
systems environment that supports student financial aid delivery. As
noted, this environment has been a major factor impeding progress in
integrating NSLDS and other title IV systems. Accordingly, a systems
architecture is needed to guide future systems development.
3. While we view OPE's short-term proposal to contract by function
rather than by program as a positive step towards improving the
operation of Education's title IV information systems, we are
concerned about the long-term capability of the Department to
develop, implement, and enforce a departmental systems architecture
which encompasses the diverse needs of title IV systems. In
finalizing this draft architecture, the Department should ensure that
it meets the requirements of the Clinger-Cohen Act of 1996 which
mandates Department-level chief information officers to develop,
maintain, and facilitate the implementation of integrated systems
architectures. The Department should also ensure that the
departmentwide systems architecture addresses the recommendations
contained in this report.
4. Conducting an assessment on the benefits of NSLDS or validating
the accuracy of the reported savings was not within the scope of work
for this report. However, in our recent high risk report,\1 we did
cite NSLDS benefits as reported by the Deputy Secretary of Education.
5. We revised the report to reflect the Department's most recent
estimate of the NSLDS budget.
--------------------
\1 GAO/HR-97-11.
MAJOR CONTRIBUTORS TO THIS REPORT
========================================================= Appendix III
ACCOUNTING AND INFORMATION
MANAGEMENT DIVISION, WASHINGTON,
D.C.
David B. Alston, Assistant Director
Leonard J. Latham, Technical Assistant Director
M. Yvonne Sanchez, Senior Information Systems Analyst-in-Charge
Glenn R. Nichols, Senior Business Process Analyst
Charles S. Stanley, Staff Evaluator
Michael P. Fruitman, Communications Analyst
HEALTH, EDUCATION, AND HUMAN
SERVICES DIVISION, WASHINGTON,
D.C.
Paula N. Denman, Senior Evaluator
ATLANTA REGIONAL OFFICE
Julie A. Schneiberg, Senior Information Systems Analyst
RELATED GAO PRODUCTS
Department of Education: Multiple, Nonintegrated Systems Hamper
Management of Student Financial Aid Programs (GAO/T-HEHS/AIMD-97-132,
May 15, 1997).
High-Risk Series: Student Financial Aid (GAO/HR-97-11, Feb. 1997).
Reporting of Student Loan Enrollment Status (GAO/HEHS-97-44R, Feb.
6, 1997).
Department of Education: Status of Actions To Improve the Management
of Student Financial Aid (GAO/HEHS-96-143, July 12, 1996).
Student Financial Aid: Data Not Fully Utilized To Identify
Inappropriately Awarded Loans and Grants (GAO/T-HEHS-95-199, July 12,
1995).
Student Financial Aid: Data Not Fully Utilized to Identify
Inappropriately Awarded Loans and Grants (GAO/HEHS-95-89, July 11,
1995).
Federal Family Education Loan Information System: Weak Computer
Controls Increase Risk of Unauthorized Access to Sensitive Data
(GAO/AIMD-95-117, June 12, 1995).
Financial Audit: Federal Family Education Loan Program's Financial
Statements for Fiscal Years 1993 and 1992 (GAO/AIMD-94-131, June 30,
1994).
Financial Management: Education's Student Loan Program Controls Over
Lenders Need Improvement (GAO/AIMD-93-33, Sept. 9, 1993).
Financial Audit: Guaranteed Student Loan Program's Internal Controls
and Structure Need Improvement (GAO/AFMD-93-20, March 16, 1993).
Department of Education: Management Commitment Needed To Improve
Information Resources Management (GAO/IMTEC-92-17, April 20, 1992).
*** End of document. ***