    Higher Education: More Information Could Help Education Determine
    the Extent to Which Eligible Servicemembers Serving on Active
    Duty Benefited from Relief Provided by Lenders and Schools
    (01-NOV-06, GAO-07-11).

    million members of the armed forces have been deployed in service
    to the United States. Congress enacted the Higher Education
    Relief Opportunities for Students (HEROES) Act to recognize the
    needs of those servicemembers who are deployed in the midst of
    pursuing postsecondary education or repaying student loans. GAO
    was asked to determine (1) how the Department of Education has
    implemented HEROES, (2) the policies and practices federal
    student loan lenders have in place to assist borrowers serving on
    active duty, and (3) the policies and practices postsecondary
    schools have to assist students who are serving on active duty.
    To address these objectives, GAO interviewed representatives from
    the nine largest Federal Family Education Loan program lenders,
    surveyed a random sample of postsecondary schools, and visited
    four colleges and universities.
    -------------------------Indexing Terms-------------------------
    REPORTNUM:   GAO-07-11
        ACCNO:   A62804
      TITLE:     Higher Education: More Information Could Help Education
    Determine the Extent to Which Eligible Servicemembers Serving on
    Active Duty Benefited from Relief Provided by Lenders and Schools
         DATE:   11/01/2006
      SUBJECT:   Aid for education
    	     Data integrity
    	     Education program evaluation
    	     Federal aid programs
    	     Financial analysis
    	     Higher education
    	     Internal controls
    	     Loan repayments
    	     Military personnel
    	     Policy evaluation
    	     Program management
    	     Student financial aid
    	     Student loans
    	     Waivers
    	     Policies and procedures
    	     Program implementation
    	     Federal Family Education Loan Program

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    GAO-07-11

         * Results in Brief
         * Background
         * Education Has Issued Waivers and Modifications to Provide Re
              * Education's Waivers and Modifications under HEROES Aimed at
              * Education Has Not Assessed the Impact of Waivers and Modific
         * Lenders Are Assisting Borrowers as Required by Education and
         * Most Schools Have Had Students Leave for Active Duty and Hav
              * Most Colleges and Universities Have Had Students Leave for A
              * Most Schools Have Policies in Place to Aid Students When The
              * School Policies Address the Broad Range of Issues Confrontin
         * Conclusions
         * Recommendation for Executive Action
         * Agency Comments
              * Sample Design and Errors
              * Nonsampling Errors
         * GAO Contact
         * Staff Acknowledgments
         * GAO's Mission
         * Obtaining Copies of GAO Reports and Testimony
              * Order by Mail or Phone
         * To Report Fraud, Waste, and Abuse in Federal Programs
         * Congressional Relations
         * Public Affairs

    Report to Congressional Requesters

    United States Government Accountability Office

    GAO

    November 2006

    HIGHER EDUCATION

    More Information Could Help Education Determine the Extent to Which
    Eligible Servicemembers Serving on Active Duty Benefited from Relief
    Provided by Lenders and Schools

    GAO-07-11

    Contents

    Letter 1

    Results in Brief 3
    Background 6
    Education Has Issued Waivers and Modifications to Provide Relief for Aid
    Recipients Serving on Active Duty, but the Impact of These Changes Is Not
    Known 9
    Lenders Are Assisting Borrowers as Required by Education and Some Are
    Providing Additional Benefits 16
    Most Schools Have Had Students Leave for Active Duty and Have Policies in
    Place to Aid Their Departure and Return 19
    Conclusions 28
    Recommendation for Executive Action 29
    Agency Comments 29
    Appendix I Methodology for Survey of Colleges and Universities 31
    Appendix II Waivers and Modifications 34
    Appendix III Comments from the Department of Education 41
    Appendix IV GAO Contact and Staff Acknowledgments 43

    Tables

    Table 1: Responsibility for Interest Payments by Postponement and Loan
    Type 8
    Table 2: Survey of Postsecondary Schools: Population, Sample, and Survey
    Respondents by Strata 32

    Figures

    Figure 1: Options Available to Suspend or Postpone Loan Repayment for
    Borrowers Serving on Active duty 11
    Figure 2: Timeline for HEROES-Related Activities 14
    Figure 3: Estimated Percentage of Schools with Students Who Have Left for
    Active Duty 20
    Figure 4: States with Laws to Assist Students Who Leave School for Active
    Duty 22
    Figure 5: Selected Options Available to Ease Departure and Return for
    Students Serving on Active Duty 23
    Figure 6: Estimated Percentage of Schools with Policies on Tuition Refunds
    for Students Leaving for Active Duty 24
    Figure 7: Estimated Percentage of Schools That Offer Campus Housing with
    Room and Board Refund Policies for Students Leaving for Active Duty 25
    Figure 8: Estimated Percentage of Schools with Policies to Minimize the
    Academic Impact for Students Leaving for Active Duty 26
    Figure 9: Estimated Percentage of Schools with Policies to Minimize the
    Academic Impact When Students Return from Active Duty 28

    Abbreviations

    DOD Department of Defense

    FFEL Federal Family Education Loan

    HEROES Higher Education Relief Opportunities for Students

    IPEDS Integrated Postsecondary Education Data System

    This is a work of the U.S. government and is not subject to copyright
    protection in the United States. It may be reproduced and distributed in
    its entirety without further permission from GAO. However, because this
    work may contain copyrighted images or other material, permission from the
    copyright holder may be necessary if you wish to reproduce this material
    separately.

    United States Government Accountability Office

    Washington, DC 20548

    November 1, 2006

    The Honorable Howard P. McKeon
    Chairman
    Committee on Education and the
    Workforce
    House of Representatives

    The Honorable Robert E. Andrews
    House of Representatives

    The Honorable John A. Boehner
    House of Representatives

    The Honorable John Kline
    House of Representatives

    The Higher Education Relief Opportunities for Students (HEROES) Act was
    first enacted in January 2002, against the backdrop of one of the most
    tragic events in U.S. history. Since September 11, 2001, more than 1.3
    million members of the armed forces have been deployed-leaving families,
    jobs, and educational pursuits-to serve their country.1 HEROES
    specifically recognizes the needs of active duty servicemembers and
    members of the National Guard and Reserves who are deployed in the midst
    of pursuing their postsecondary education or repaying student loans. In
    some instances, servicemembers may only have a few days to prepare for
    departure and ensure that their affairs are in order. They may need to put
    classes and coursework on hold, notify school officials and lenders, and
    some may not be able to make regular payments on their federal student
    loans while they are gone. The law authorizes the Secretary of Education
    to waive or modify any statutory or regulatory provisions relating to
    federal student financial aid to ensure that individuals who are serving
    on active duty in connection with a war, other military operation, or
    national emergency are not placed in a worse position financially because
    of their military service. The law requires the Department of Education
    (Education) to report on the impact of these waivers and modifications on
    affected students and student loan borrowers within 15 months of
    exercising its authority. HEROES also addresses the needs of
    servicemembers who must leave school for active duty service. While the
    law does not require postsecondary schools to assist these students, it
    encourages schools to provide tuition refunds for courses they were unable
    to complete and to minimize reapplication requirements when they return to
    school.

    1Data include active duty, Reserve, and National Guard servicemembers
    deployed through May 2006.

    To better understand the types of relief students and federal student loan
    borrowers serving on active duty receive, you asked us to determine (1)
    how the Department of Education has implemented HEROES, (2) the policies
    and practices federal student loan lenders have in place to assist
    borrowers serving on active duty, and (3) the policies and practices
    postsecondary schools have to assist students who are serving on active
    duty.

    To learn how Education has implemented HEROES, we reviewed the waivers and
    modifications along with guidance Education communicated through Dear
    Colleague Letters to the higher education community, and interviewed
    agency officials at Education and the Department of Defense. We also
    reviewed summary information about contacts made to the Ombudsman at
    Education's Office of Federal Student Aid to determine the extent to which
    federal student aid recipients experienced difficulties with their schools
    or lenders as a result of active duty service.2 To determine what policies
    and practices lenders have in place to assist student loan borrowers
    serving on active duty, we conducted semistructured interviews with
    representatives of the nine largest lenders in the Federal Family
    Education Loan (FFEL) program that hold about two-thirds of the program's
    $289 billion in outstanding federal student loan volume.3 To determine
    what policies or practices colleges and universities have in place to
    assist students serving on active duty, between January and March 2006, we
    surveyed a random sample of 2-year and 4-year public postsecondary schools
    and 4-year private, nonprofit postsecondary schools with enrollments of at
    least 100.4 We excluded other types of schools, such as private,
    for-profit schools, from our sample, as they represent a relatively small
    percentage of postsecondary schools. We received a response rate of 77
    percent. The survey collected information about the types of policies or
    practices that schools have in place to assist students leaving for active
    duty service, but we did not evaluate their effectiveness. To better
    understand the range of assistance provided to students who must leave
    school for active duty service, we selected four postsecondary schools to
    visit based on their extensive experience with military departures.
    Specifically, we visited two public universities from our survey sample
    that have had more than 100 students leave for active duty service since
    the passage of HEROES, along with a community college and public
    university that serve a large number of students in the U.S. military at
    installations throughout the world. To gain students' perspectives as they
    transitioned out of and back into academic life and dealt with their
    student loans, we interviewed seven students who experienced an
    interruption in their studies as a result of active duty service. The
    students represented a range of individuals serving in the National Guard
    and Reserves at different stages in their academic careers and personal
    lives, including undergraduate and graduate students, both single and
    married with dependents. The results from these interviews are not
    generalizable to or representative of all students in this affected
    population. Instead, the interviews provide a glimpse into the issues this
    particular student population faces. We conducted our work between June
    2005 and September 2006 in accordance with generally accepted government
    auditing standards. See appendix I for a detailed description of our
    survey methodology.

    2Education identified 167 cases potentially relating to the provisions
    under HEROES. In most cases the Ombudsman provided general assistance to
    borrowers, such as explaining the types of relief available. However, the
    Ombudsman intervened on the borrower's behalf in about 17 percent of these
    cases, working with lenders, schools, and guaranty agencies to resolve
    problems borrowers had with their federal student loans.

    3While Education's waivers and modifications also apply to the Direct Loan
    program, we did not review it because it is operated directly by
    Education. Under this loan program, money is borrowed directly from the
    federal government and the Department of Education acts as the lender. At
    the end of fiscal year 2005, the Direct Loan portfolio was valued at about
    $96 billion. Instead, we focused our review on the larger FFEL program,
    also known as the guaranteed student loan program. Under this program,
    money is borrowed from private lenders, and the federal government
    guarantees repayment if the borrowers default.

                                    Results in Brief

    Education has waived and modified certain federal student financial aid
    provisions and issued guidance to the higher education community to
    provide relief for active duty servicemembers, but it has not assessed the
    extent to which servicemembers are taking advantage of the relief. These
    waivers and modifications are designed to help federal student financial
    aid recipients avoid negative financial consequences, such as defaulting
    on their student loans, and ease administrative requirements that might
    delay the provision of assistance. For example, Education has expanded
    opportunities for servicemembers to avoid or postpone repayment. Students
    who leave for active duty service no longer have to return or repay
    federal grant funds for academic terms they were unable to complete, and
    they are treated as still enrolled in school, which means that they do not
    yet have to begin repaying any student loan disbursements they have
    received. Education also waived the requirement that borrowers provide
    written documentation of active duty service in order to qualify for
    certain benefits, allowing lenders to provide immediate assistance to
    borrowers, such as suspending their loan payments for up to 1 year, based
    on verbal notification. Education has also issued guidance regarding these
    changes to the higher education community, including postsecondary schools
    and lenders. However, Education has not collected key information that
    would allow it to assess the extent to which eligible servicemembers have
    received assistance from the flexibilities allowed by the waivers and
    modifications, as required by HEROES. Based on the Act's requirements,
    Education should have reported to Congress on the impact of its waivers
    and modifications by March 2005. Education has no plans to complete the
    study because it interpreted the Act as requiring a rigorous experimental
    design that officials say would be costly and cannot currently be
    supported with Education's data systems. However, it has not explored the
    possibility of leveraging outside data sources to fulfill the mandate.

    4Percentage estimates are based on the sample and are subject to sampling
    error. Unless otherwise noted, we are 95 percent confident that the
    results we obtained are within +/- 10 percentage points of what we would
    have obtained if we had received responses from the entire population.
    Each sample element was subsequently weighted in the analysis to account
    for all members of the population, including those that were not selected.

    Federal student loan lenders have implemented policies and practices that
    are designed to minimize the financial impact and administrative burden
    for borrowers serving on active duty. Many of these are required by
    Education's waivers and modifications, such as providing options that
    allow borrowers to suspend or postpone repayment of their student loans.
    For borrowers who were making payments on their loans at the time they
    left for active duty service, lenders said they will suspend the payments.
    However, depending on the type of loan they have and the type of
    assistance they are eligible for, borrowers may be responsible for paying
    the interest that continues to accrue on the loans. Some of the lenders we
    interviewed, however, reported practices to minimize the financial impact
    on these borrowers that go beyond the requirements of the HEROES waivers
    and modifications. Specifically, lenders can periodically capitalize the
    interest that continues to accrue during periods when a borrower's loan
    repayment is suspended, but three lenders have chosen not to capitalize
    the interest, which reduces the amount of interest that borrowers must
    pay. Additionally, one lender offered to forgive $2,500 in loans for
    servicemembers who have lived in Pennsylvania or attended college there.
    To minimize the administrative burden, lenders have simplified procedures
    for receiving notification about a borrower's active duty service.
    Specifically, borrowers only need to contact the lender once to receive
    assistance, and lenders will also accept notification from someone acting
    on the borrower's behalf, such as a family member or commanding officer.

    We found that most colleges and universities have had students leave for
    active duty service and have policies or practices in place to help them
    when they leave and when they return to school. Specifically, we estimate
    that about 80 percent of colleges and universities have had students who
    departed for active duty service, and nearly three-quarters have policies
    or practices to help them. About two-thirds of colleges reported that
    their policies were in place prior to the passage of the HEROES Act of
    2001; some schools' policies may have been influenced by laws in 26 states
    that are designed to assist students when they leave school for active
    duty service. Schools reported a number of policies or practices to
    minimize the financial and academic impact of active duty service, such as
    providing tuition refunds and options to withdraw from classes or complete
    coursework later. Five of the seven students we interviewed chose to
    withdraw from their courses, often to give them time to put their personal
    affairs in order. We found that a majority of the colleges and
    universities with policies to minimize the academic impact of leaving for
    active duty service also have policies to help students reenroll,
    including suspending the requirement that they reapply for admission and
    waiving changes to degree requirements.

    In this report, we recommend that the Secretary of Education undertake the
    congressionally mandated study to determine the extent to which eligible
    servicemembers are receiving assistance under HEROES.

    We provided copies of a draft of this report to the Department of
    Education and the Department of Defense for review and comment. Education
    agreed with the report's findings and said the recommendation has merit.
    Education has agreed to explore options for conducting the congressionally
    mandated study. Education's written comments are in appendix III. The
    Department of Defense had no comments.

                                       Background

    Congress has demonstrated its commitment to providing education benefits
    to members of the armed forces who are interested in pursuing
    postsecondary education since the enactment of the Servicemen's
    Readjustment Act of 1944, also known as the GI Bill of Rights. Since that
    time other programs have been implemented to meet the educational needs of
    servicemembers, including the current Montgomery GI Bill, which provides
    education assistance to veterans and active duty, Reserve, and National
    Guard servicemembers. As of fiscal year 2007, active duty servicemembers
    can receive up to $1,075 monthly for a maximum of 36 months, while
    Reservists can receive up to $309 monthly for a maximum of 36 months. In
    fiscal year 2005, another program, the Reserve Educational Assistance
    Program, was implemented to provide benefits for Reservists who are called
    or ordered to active duty in response to a war or national emergency.
    Those who meet the length of service requirement can receive up to $827
    toward their education, per month for 36 months. Congress has also given
    the Army, Navy, Marines, Air Force, and Coast Guard the ability to provide
    tuition assistance to active duty servicemembers and members of the
    Reserves and National Guard. These servicemembers can currently receive up
    to $4,500 in tuition assistance benefits annually.

    In addition to these targeted programs, servicemembers may be eligible to
    participate in the federal student financial aid programs authorized by
    Title IV of the Higher Education Act, which authorizes federal grant and
    loan programs for all eligible students. Specifically, if their military
    education benefits, income, and assets do not fully cover the estimated
    cost of attendance, servicemembers may be eligible for federal Pell
    grants, which do not have to be repaid, as well as federally subsidized
    Stafford and Perkins student loans, on which the federal government pays
    the interest while the borrower is in school. Servicemembers, like other
    borrowers, may also qualify for unsubsidized federal Stafford and PLUS
    loans if they do not demonstrate financial need.5 Because these loans are
    not subsidized by the federal government, borrowers are responsible for
    paying all of the interest that accrues on the loan from the time the loan
    is disbursed until it is paid in full.

    5Stafford loans for students and PLUS loans for parents and graduate
    students are made through two federal student loan programs. Loans in the
    Federal Family Education Loan program are made by private lenders and
    guaranteed by the federal government, while loans in the Direct Loan
    program are made directly by the federal government through a student's
    school. Perkins loans are low-interest loans (5 percent) for undergraduate
    and graduate students with exceptional financial need and are made by
    postsecondary schools that participate in Title IV Campus-Based Aid
    programs.

    The Higher Education Relief Opportunities for Students (HEROES) Act of
    2003 was enacted to recognize the difficulties that postsecondary students
    and federal student financial aid recipients serving on active duty may
    experience in transitioning in and out of college and repaying their
    student loans.6 The law covers individuals who are serving on active duty,
    during a war, other military operation or national emergency, including
    members of the National Guard serving on full-time active duty and
    Reserves who are called to active duty.7 The law extends much of the
    relief that Congress initially provided in the HEROES Act of 2001,
    following the tragic events of September 11, 2001.8 Specifically, the
    HEROES Act of 2003 authorizes the Secretary of Education to waive or
    modify any statutory or regulatory provisions relating to federal student
    financial aid to minimize the financial impact and administrative
    requirements for individuals who are serving on active duty. The law
    requires Education to report to Congress on the impact of its efforts
    within 15 months of exercising its authority. While the law does not
    require postsecondary schools to assist students who leave for active duty
    service, it encourages them to provide tuition refunds for incomplete
    coursework and to minimize reapplication requirements.

    Federal student financial aid provisions include a number of options
    designed to allow any federal student loan borrowers-whether serving on
    active duty in the military or not-to postpone repayment. For example,
    borrowers are not expected to make payments on their loans while enrolled
    in school on at least a half-time basis, while completing a graduate
    fellowship, or for the first 6 or 9 months after they have left school,
    known as the grace period.9 There are also options that allow borrowers to
    postpone repayment if they are having difficulty meeting their repayment
    schedule. Borrowers may qualify for a deferment if they have been unable
    to find full-time employment or can demonstrate economic hardship.10
    Additionally, members of the armed forces may qualify for a military
    deferment while they are serving on active duty during a war, other
    military operation, or national emergency.11 Borrowers who are not
    eligible for any of the deferment options can request forbearance, a
    temporary period during which loan payments are either reduced or
    postponed. While borrowers do not have to make loan payments during
    in-school, grace, deferment, or forbearance periods, whether or not they
    are responsible for paying the interest that continues to accrue depends
    on the type of loan and postponement, as shown in table 1.

    6Pub L. No. 108-76 (2003).

    7In addition to members of the armed forces, individuals who live or work
    in an area that is declared a disaster area in connection with a national
    emergency, as well as those who suffer direct economic hardship as a
    result of a war, other military operation, or national emergency are
    covered by the Act.

    8Pub. L. No. 107-122 (2002). The provisions of this Act expired on
    September 30, 2003.

    9Federal Stafford loan borrowers are provided a 6-month grace period,
    while those in the Perkins Loan program are provided a 9-month grace
    period.

    Table 1: Responsibility for Interest Payments by Postponement and Loan
    Type

                                       Loan type
    Type of postponement Subsidized         Unsubsidized
    In-school            Federal government Student
    Grace                Federal government Student
    Deferment            Federal government Student
    Forbearance          Student            Student

    Source: GAO analysis.

    10Borrowers may be eligible for an economic hardship deferment if they are
    receiving payments under a federal or state public assistance program,
    such as Food Stamps or Supplemental Security Income, or serving as a Peace
    Corps volunteer, among other things.

    11Until recently, military deferments were only available for borrowers
    repaying loans that were disbursed prior to July 1, 1993. However,
    enactment of the Higher Education Reconciliation Act of 2005 created a new
    military deferment. Pub. L. No. 109-171, Title VIII, Subtitle A (2006).
    Beginning July 1, 2006, borrowers performing qualifying active duty
    service can request a military deferment for loans that were first
    disbursed on or after July 1, 2001.

        Education Has Issued Waivers and Modifications to Provide Relief for Aid
    Recipients Serving on Active Duty, but the Impact of These Changes Is Not Known

    Education has implemented HEROES by waiving and modifying certain federal
    student financial aid provisions to ease the financial impact and
    administrative burden of meeting aid obligations for recipients serving on
    active duty. The extent to which servicemembers are benefiting from these
    waivers and modifications is not known, however, because Education has not
    collected key information that would allow it to assess the impact of
    these changes as required by HEROES.

    Education's Waivers and Modifications under HEROES Aimed at Relieving Financial
    and Administrative Burden for Student Financial Aid Recipients Serving on Active
    Duty

    To help federal student financial aid recipients who are serving on active
    duty avoid negative financial consequences, such as loan default,
    Education has expanded opportunities to avoid or postpone repayment of
    federal student grants and loans. Students who leave school for active
    duty service no longer have to return or repay federal grant funds for
    academic terms they were unable to complete. Moreover, students who leave
    school for active duty service are considered to be still enrolled in
    school, which means that they do not yet have to begin repaying their
    student loans. Similarly, Education has expanded opportunities to postpone
    repayment for borrowers serving on active duty who are out of school or
    enrolled less than half-time. Specifically, under the HEROES waivers, if
    borrowers were in a grace period at the time of departure, lenders are
    required to maintain loans in a grace period for up to 3 years while the
    borrower is performing active duty service and provide borrowers with a
    full 6-month or 9-month grace period once they return, depending on the
    type of loan.12 Borrowers in repayment no longer have to provide their
    lender written documentation of active duty service to have loan repayment
    suspended for up to 1 year. Instead, under the HEROES waivers, lenders
    must suspend loan payments based on verbal notification from borrowers or
    another reliable source. Figure 1 illustrates the options available to
    suspend or postpone loan repayment for federal student loan borrowers
    serving on active duty.

    12Members of the Reserves were already eligible for this benefit based on
    federal student financial aid provisions, but Education has modified the
    provision to ensure coverage for all servicemembers eligible for relief
    under HEROES. Borrowers with federal Stafford loans are eligible for a
    6-month grace period, while borrowers with federal Perkins loans are
    eligible for a 9-month grace period.

    Figure 1: Options Available to Suspend or Postpone Loan Repayment for
    Borrowers Serving on Active duty

    Education's waivers and modifications also cover borrowers who had already
    defaulted on their student loans at the time of departure.13 Specifically,
    Education has waived the provisions that require schools and guaranty
    agencies to attempt to collect on defaulted loans while the borrower is
    performing active duty service.14 Education has also waived requirements
    related to getting loans out of default. Specifically, once a borrower has
    defaulted on a loan, he or she can usually "rehabilitate" it by making 12
    consecutive on-time payments. To ensure that borrowers on active duty
    service are not penalized, Education has waived the requirement so that
    any payments that are missed during active duty service or during a
    3-month transition period upon return will not be treated as an
    interruption.

    The waivers and modifications also encourage schools to use their
    professional judgment in determining financial need for students whose
    family income has been affected by active duty service, regardless of
    whether the student or the student's parent or spouse is serving on active
    duty. Education's waivers and modifications allow financial aid
    administrators to consider more current financial information than what
    students typically submit when applying for federal student financial aid
    if it reduces the amount the student and his or her family would be
    expected to pay toward the cost of attendance. For example, the expected
    family contribution for the 2006-2007 academic year would typically be
    calculated using financial information from the 2005 calendar year, but
    the waivers and modifications allow financial aid administrators to use
    financial information from the 2006 calendar year for those serving on
    active duty and their spouses and dependents. Financial aid administrators
    need not make this adjustment if doing so will provide no financial
    benefit to the student, such as in cases in which active duty service
    leads to an increase in income.

    Education's waivers and modifications also ease the administrative, or
    "paperwork," burden federal student financial aid recipients may
    experience when they are serving on active duty. For example, Education
    has made allowances for borrowers who have to depart quickly by requiring
    lenders to accept notification from someone acting on the borrower's
    behalf, such as a spouse or parent. Education has also relaxed the
    requirement that postsecondary schools obtain written authorization from a
    borrower regarding the disbursement of financial aid when military service
    would make complying with this requirement difficult. Under the waivers
    and modifications, borrowers serving on active duty also have more time to
    cancel a student loan. While borrowers normally have 14 days from
    receiving notification from their school that their loan has been credited
    to their account to cancel all or a portion of their student loan,
    borrowers serving on active duty have 60 days.

    13In the Direct and FFEL loan programs, default occurs when borrowers on a
    monthly payment schedule become 270 days delinquent. In the Perkins Loan
    program default occurs when borrowers miss one installment payment.

    14Guaranty agencies are state or private not-for-profit agencies that
    guarantee payments to FFEL lenders if students fail to repay their loans.
    Schools are responsible for attempting to collect on defaulted Perkins
    Loans, and guaranty agencies are responsible for collecting on defaulted
    loans in the FFEL loan program.

    Education officials told us that when they developed the waivers and
    modifications, they began by considering which federal student financial
    aid provisions could have negative financial consequences for individuals
    eligible for relief under HEROES and then conducted internal brainstorming
    sessions to identify options for relief. The officials said the process
    was guided by the understanding that Education was charged with waiving
    and modifying existing statutory and regulatory provisions, not creating
    new regulations or spending additional funds. Prior to issuing the waivers
    and modifications, Education officials reached out to industry groups,
    such as the National Association of Student Financial Aid Administrators
    and the National Council of Higher Education Loan Programs, to discuss the
    changes being considered and elicit additional ideas on how to best assist
    students and federal student financial aid recipients serving on active
    duty. Additionally, Education officials said the Department of Defense was
    instrumental in helping Education understand the deployment process, in
    particular how quickly deployment can occur and how little time
    servicemembers may have to attend to personal matters. One Education
    official said that understanding the nature of deployment was important in
    helping Education work through concerns about program integrity.
    Specifically, there were concerns that if administrative requirements were
    reduced by waiving written documentation requirements and allowing someone
    else to act on the borrower's behalf, program integrity might be adversely
    affected. Education decided that minimizing the obstacles to obtaining
    relief to ensure that borrowers did not inadvertently default on their
    student loans outweighed these concerns. Additionally, the official noted
    that the risks to the federal government are minimal since borrowers can
    only obtain 1 year of assistance without additional documentation, and
    they will eventually have to repay the remaining balance of their loans.

    After the passage of HEROES, Education announced limited waivers to
    statutory and regulatory provisions in May 2003 and announced more
    comprehensive waivers and modifications in December 2003. As required by
    HEROES, Education published the waivers and modifications in the Federal
    Register, which also provided guidance to help postsecondary schools,
    lenders, and guaranty agencies understand the changes. The waivers and
    modifications announced as a result of HEROES update and expand much of
    the guidance Education issued to the higher education community through
    Dear Colleague Letters immediately following the terrorist attacks of
    September 11, 2001, and again in March 2003. The initial Dear Colleague
    Letters focused on providing relief for students and federal student loan
    borrowers affected by the terrorist attacks, including military personnel.
    In October 2005, Education extended these waivers and modifications
    through September 2007. (See fig. 2.)

    Figure 2: Timeline for HEROES-Related Activities

    See appendix II for a full list of the waivers and modifications.

    Education Has Not Assessed the Impact of Waivers and Modifications on Students
    and Federal Student Financial Aid Recipients, as Required

    Education has not assessed the impact of waivers and modifications on
    federal student financial aid recipients and Title IV federal student
    financial aid programs as mandated by Congress. Specifically, both the
    2001 and 2003 HEROES Acts required Education to report to Congress on the
    impact of its waivers and modifications within 15 months of first
    exercising its authority to waive or modify federal student financial aid
    provisions. Based on Education's issuance of comprehensive waivers and
    modifications in December 2003, a study should have been completed no
    later than March 2005. While HEROES does not specify how Education should
    go about assessing the impact of its waivers and modifications, Education
    officials interpreted the Act as requiring a rigorous experimental design
    that they say would be costly and cannot currently be supported with
    Education's data systems. Therefore, Education currently has no plans to
    complete the required study.

    Currently, Education does not have a mechanism for identifying the total
    number of federal student financial aid recipients who have been provided
    assistance under HEROES within its data systems. Education maintains a
    central database of all federal student loans and Pell grants through its
    National Student Loan Data System, which tracks the status of loans and
    grants through their life cycle. The database collects required
    information on federal student aid recipients' enrollment status from
    schools and the status of their loans from lenders and guaranty agencies.
    Based on current reporting requirements, the system can only be used to
    identify two types of assistance provided to borrowers based on their
    military service, military deferment and military grace periods, which are
    coded uniquely in the system and existed prior to HEROES. Education
    officials told us that the system would have to be reengineered to
    identify other types of borrowers who received assistance under HEROES,
    such as those with loans in forbearance, because there are no additional
    codes in the system to explain what made the loan eligible for assistance,
    such as military service or financial difficulty.

    When Education announced waivers and modifications, it included a
    provision requiring postsecondary schools and lenders to document their
    use of the waivers and modifications in such a way that they could report
    on their effect to Education upon request. However, the announcement did
    not include any specific guidance on what types of data Education wanted
    and how schools and lenders should collect it to ensure Education could
    use the data. Education officials told us that they thought the
    requirement went largely unnoticed and that lenders generally do not
    collect information on this population in such a way that would be
    reportable. For example, the officials said that while lenders maintain
    information on the reasons for forbearance in a borrower's individual loan
    record, they would not have a mechanism for running a query to identify
    every borrower granted forbearance based on active duty service. In our
    discussions with lenders we found that three of the nine could provide us
    some data on the number of borrowers whose loan payments had been
    suspended through forbearance as a result of military service. Moreover,
    these lenders could provide some data on borrowers whose loans had been
    maintained in an in-school period while serving on active duty.

    Education has not explored other data sources that might be used in
    combination with its data systems to complete the congressionally required
    study. For example, the Department of Defense (DOD) has data that may be
    used in conjunction with Education's data to assess the number of federal
    student financial aid recipients who have been assisted by HEROES. DOD
    told us that it has extensive information on servicemembers, including
    mobilizations and deployments, through its Defense Manpower Data Center.
    DOD officials said it would be possible to conduct a match using common
    data points, such as Social Security numbers and dates of birth, with
    Education's National Student Loan Data System, to identify servicemembers
    who were participating in federal student financial aid programs at the
    time they were deployed. Once the target population has been identified,
    additional analysis to determine the extent to which these servicemembers
    received some relief might be possible. Education officials agreed that
    such a match would be possible, but said they would have concerns about
    being responsible for sensitive national security data of this nature.
    Additionally, they thought resources could be another limitation to such a
    match, since Education would likely have to provide funds to cover the
    work if it entered into a memorandum of understanding with DOD.

    Lenders Are Assisting Borrowers as Required by Education and Some Are Providing
                                  Additional Benefits

    Lenders have a variety of policies and practices in place designed to
    provide relief for federal student loan borrowers serving on active duty,
    many of which are required under Education's waivers and modifications. To
    minimize the financial impact on borrowers, lenders provide them with
    options to suspend or postpone repayment on their student loans. For
    example, borrowers who were enrolled in school on at least a half-time
    basis before leaving for active duty service are eligible to have their
    loans maintained in an in-school status period, which means that they do
    not enter repayment while they are serving on active duty and are provided
    additional time to reenroll after completing their service. For borrowers
    who are repaying their loans, lenders said they will suspend repayment
    through a military deferment or forbearance during active duty service.
    Because borrowers are responsible for paying the interest that accrues on
    loans in forbearance, lenders consider forbearance as the last option for
    suspending repayment on a loan when borrowers are not eligible for any
    other type of assistance.

    Lenders also told us about policies or practices they have to minimize the
    financial impact on borrowers that go beyond the requirements of HEROES.
    Some lenders we interviewed reported practices to minimize the amount of
    interest that accrues while a loan is in forbearance during active duty
    service. While borrowers are not required to make any payments during a
    forbearance period, the interest on these loans continues to accrue, and
    ultimately the borrower is responsible for paying it. If the borrower
    elects not to pay any of the interest that has accrued during the
    forbearance period, the interest will eventually be capitalized by adding
    the accrued interest to the remaining principal balance. From that point
    on, interest will be assessed on the new, higher principal balance.
    Federal student financial aid provisions allow lenders to capitalize the
    interest that accrues on loans in forbearance either quarterly or at the
    end of the forbearance period, depending on when the loan was originally
    disbursed.15 However, three lenders told us that they do not capitalize
    the interest on loans in forbearance as a result of active duty service,
    which reduces the total amount of interest that borrowers serving on
    active duty must pay. Additionally, one Pennsylvania-based lender has
    extended benefits beyond the requirements of HEROES by offering loan
    forgiveness for servicemembers who have lived in Pennsylvania or attended
    college there. The program provides a one-time loan-forgiveness benefit of
    $2,500 for members of the armed forces who have been in an active duty
    status between September 11, 2001, and December 31, 2006.

    Lenders also follow Education's waivers and modifications designed to
    reduce the administrative burden for borrowers serving on active duty, for
    example, by providing immediate assistance to borrowers based on verbal
    notification of their active duty service. A representative from one of
    the lenders we interviewed told us that the simplified documentation
    requirements allowed under the HEROES waivers and modifications have made
    it easier for lenders to quickly respond to borrower needs. She said that
    without this assistance, borrowers might have become delinquent on their
    loans-which could adversely affect their credit rating-while waiting to be
    approved for forbearance because of the documentation requirements.

    15For loans disbursed prior to July 1, 2000, lenders can capitalize the
    interest on loans in forbearance as often as quarterly. However, loans
    issued on or after July 1, 2000, can only be capitalized at the end of the
    forbearance period.

    Lenders told us that with these simplified procedures, they could help
    servicemembers with just one short telephone call. For example, all the
    lenders we interviewed have toll-free numbers that borrowers can call to
    obtain information about or request assistance with their loans, and
    borrowers only need to contact the lender once to receive assistance, such
    as military deferment or forbearance. Lenders said the borrower is
    typically the one who contacts the lender about his or her active duty
    service, but they will also accept notification from someone acting on the
    borrower's behalf, such as a spouse, parent, or other reliable source.
    Three lenders explained that individuals who notify the lender must have
    sufficient information about the borrower's account to be considered a
    reliable source. During the initial contact, a customer service
    representative will determine what benefits the borrower is eligible for
    based on his or her individual circumstances. According to several
    lenders, this stage of the process can usually be completed in 5 to 10
    minutes, and any changes that are made to the loan status will be
    processed within 3 to 5 days, at which time a notice is mailed to the
    borrower confirming the changes that were made and the time periods these
    changes will remain in effect.

    The process is similar when borrowers return. However, since borrowers may
    not contact the lender when they return from active duty service, lenders
    said that they rely on information documented in the borrower's account to
    determine the length of the benefit period. Lenders send borrowers a
    notice by mail before the benefits lapse to inform them of what will
    happen to the loans at the end of the period, along with contact
    information should the borrower need additional assistance with their
    loans. For example, a borrower with a loan in forbearance would receive a
    notice indicating when the forbearance period is scheduled to end along
    with repayment terms, such as when the borrower will have to begin making
    payments and how much he or she will have to pay each month. The advance
    notice is designed to allow sufficient time for borrowers who are
    continuing to serve on active duty to submit copies of military orders to
    extend the assistance they are receiving with their loans. Borrowers need
    not take any action when they receive notification from the lender if they
    have returned from active duty service and do not require further
    assistance with their loans.

    While the benefits available to borrowers under HEROES end after the
    borrower has returned from active duty service and used any available
    transition period, most of the lenders we talked to said they would
    continue to work with any borrowers having difficulty making their monthly
    payment after returning from active duty service. For example, officials
    from one lender said they would offer borrowers other repayment
    alternatives, such as income-sensitive repayment to lower their monthly
    payment amount, or additional forbearance time as allowed under federal
    student financial aid provisions.

    Most Schools Have Had Students Leave for Active Duty and Have Policies in Place
                           to Aid Their Departure and Return

    The majority of colleges and universities have had students who left
    school for active duty service before the end of their academic term and
    have policies to assist these students when they leave and when they
    return to school. Schools reported having policies covering refunds of
    tuition and room and board, grading, and changes to graduation and degree
    requirements that might occur while students are serving on active duty.

    Most Colleges and Universities Have Had Students Leave for Active Duty

    The majority of colleges and universities-about 80 percent-have had
    students leave school for active duty service prior to the end of their
    academic term, according to our survey, with a greater percentage of
    public schools having experience with such departures.16 For example, we
    estimate that 66 percent of 4-year private schools had students who left
    for the military compared to 96 percent of 4-year public schools (see fig.
    3). Although the majority of schools had students who left for active duty
    service, most of these schools could not identify the number of students
    who left since HEROES was first enacted in January 2002. Officials at two
    of the universities we visited told us that more than 100 of their
    students had left and partly attributed the large number of departures to
    their campuses' proximity to military bases and National Guard units.

    16Our survey asked schools if they had any students who left for active
    duty service.

    Figure 3: Estimated Percentage of Schools with Students Who Have Left for
    Active Duty

    Note: The 95 percent confidence interval for the estimated percentage of
    4-year private schools is from 53 to 78 percent.

    Most Schools Have Policies in Place to Aid Students When They Leave for Active
    Duty Service and Return to School

    We estimate that nearly three-quarters of schools have policies or
    practices for students who leave for active duty service prior to the end
    of the academic term.17 Schools with students who have left were more
    likely to report having policies. About two-thirds of schools reported
    that their policies were in place prior to the enactment of the first
    HEROES Act in 2001. For example, officials at one university we visited
    said the institution's policies were developed in the 1990s in response to
    the many students who had to leave school for active duty service in
    Kuwait. Some of these schools' policies may have been influenced by state
    law. Specifically, we identified 26 states that have laws to assist
    students who leave for active duty service (see fig. 4). Most of them
    apply only to public colleges and universities, and require schools to
    have nonpunitive withdrawal policies and issue tuition refunds for
    students who choose to withdraw. Both Texas and Florida, for example,
    require public colleges and universities to provide students with the
    option of receiving a full tuition refund for any course they withdraw
    from or completing it at a later date without penalty. Additionally, Texas
    provides professors with the flexibility to assign students a grade based
    on the work completed at the time of departure.

    17Policies and practices are referred to as policies here forward in the
    report.

    Figure 4: States with Laws to Assist Students Who Leave School for Active
    Duty

    School Policies Address the Broad Range of Issues Confronting Students Who Must
    Leave for Active Duty Service

    Most schools have policies in place to help students who leave for active
    duty service transition out of and back into school. Figure 5 illustrates
    the options that may be available to these students when they depart and
    return.

    Figure 5: Selected Options Available to Ease Departure and Return for
    Students Serving on Active Duty

    For students who leave for active duty service before completing an
    academic term, the majority of schools offer tuition refunds and various
    options for withdrawing from courses. We estimate that 70 percent of
    colleges and universities have tuition refund policies for students
    leaving for active duty service, and most of them provide a full tuition
    refund for these students (see fig. 6). The majority of schools that
    provide a partial refund prorate the refund based on how much of the term
    the student has completed.

    Figure 6: Estimated Percentage of Schools with Policies on Tuition Refunds
    for Students Leaving for Active Duty

    Note: One percent of schools that have tuition refund policies reported
    that their policies do not allow for any portion of the tuition to be
    refunded.

    Some schools also reported having policies that allow for the refund of
    room and board. Of the schools that offer campus housing, 52 percent
    reported having policies regarding room and board refunds. Of those, 82
    percent reported that they provide a partial refund of room and board,
    usually based on the amount of the term completed, for students leaving
    for active duty (see fig. 7).

    Figure 7: Estimated Percentage of Schools That Offer Campus Housing with
    Room and Board Refund Policies for Students Leaving for Active Duty

    Note: This analysis includes only colleges and universities that offer
    campus housing based on data in the Integrated Postsecondary Education
    Data System (IPEDS). The 95 percent confidence interval for the estimated
    percentage of schools that offer a full refund is from 10 to 30 percent,
    and the 95 percent confidence interval for schools that provide a partial
    refund is from 70 to 90 percent.

    Most of the schools require documentation of active duty service, such as
    a copy of military orders, before students can receive a refund of tuition
    or room and board, although in some cases students may not have
    documentation before leaving. For example, officials at one university we
    visited said that their students who left for active duty service shortly
    after September 11, 2001, did not receive their military orders before
    departing, and as a result their tuition refunds could not be processed
    before they left.

    Students may also risk failing courses or delaying graduation when they
    leave school before the term has been completed, but about two-thirds of
    schools have put in place policies to help them minimize the academic
    impact of leaving (see fig. 8). Almost all of these schools allow students
    leaving for active duty service to receive a grade of "incomplete"-giving
    them the option to finish the class later-or withdraw from a course
    without receiving a grade. Of the schools that allow a student to receive
    an incomplete in an unfinished course, 68 percent require the student to
    complete the coursework within specific time frames-anywhere from less
    than a month to 36 months-to receive a letter grade in the course. In
    addition, over half of schools that have policies to minimize academic
    impact allow instructors to assign a grade based on partially completed
    coursework.

    Figure 8: Estimated Percentage of Schools with Policies to Minimize the
    Academic Impact for Students Leaving for Active Duty

    Of the seven students we interviewed, one was able to work with his
    instructors to complete remaining coursework for a grade before leaving
    for active duty service, and five opted to withdraw from their classes.18
    An undergraduate student in the Army National Guard we interviewed said
    that he withdrew from his classes as soon as he received the alert that
    his military unit would be deployed. He said that withdrawing from school
    allowed him to focus on ensuring that health insurance and medical care
    were in place for his son, who has a serious illness. A graduate student
    in the Marine Reserves who received 1 week advance notice of deployment
    withdrew from classes to allow time to handle financial obligations. While
    withdrawing from classes ensures that students will not have failing
    grades to contend with, two students expressed concern about how the
    withdrawals on their transcripts would be perceived by other postsecondary
    schools when applying for a transfer or graduate study. The university
    these students attend has since begun allowing students to get these
    withdrawals deleted from their records, which means there would be no
    record of the student having attempted the course on their transcript. One
    undergraduate student we spoke to reported difficulty withdrawing from his
    classes. He told us that while he was deployed multiple times for
    durations of 1 to 3 weeks, his university approved only one of his
    requests to withdraw. Even though his deployments were relatively short,
    he said it was difficult for him to keep up with the coursework and his
    academic performance suffered as a result.

    18One student we interviewed had been accepted by the university, but had
    not yet enrolled when called to active duty. He deferred enrollment until
    he returned from service.

    In addition to allowing students to withdraw or receive a grade of
    incomplete, some of the colleges we visited provided other options for
    students leaving for active duty service to complete classes. Officials at
    one college we visited said that some students who have left school for
    active duty service have been able to complete a course by delivering
    remaining assignments to their professor by Email or completing a
    classroom course via the Internet when it is offered in an online version.
    One university we visited that has a large number of military students
    reported great increases in online course enrollment in 7 years, from
    20,000 to 150,000 students. Also, a college based in Texas with campuses
    on military bases worldwide offers courses using such tools as prerecorded
    and live lectures displayed over the Internet, interactive online
    discussions that can facilitate student participation, and course
    materials provided on compact disc.

    When students return to school from active duty service, most schools also
    have policies to ease their transition. Specifically, about half of
    schools with policies to minimize the academic impact of leaving for
    active duty service do not require students to reapply for admission (see
    fig. 9). Of those schools that require students to reapply, almost all
    guarantee readmission, and 84 percent waive application fees.19 Officials
    at one college we visited reported that students returning from active
    duty service are required to reapply just to ensure that the school has
    updated contact information for the students. Moreover, a student may
    return from active duty to find that degree requirements have been
    changed, such as courses required for a major, which could delay
    graduation. Sixty percent of schools with policies designed to minimize
    the academic impact of leaving for active duty service exempt returning
    students from changes in degree requirements that occurred during their
    absence (see fig. 9). Additionally, the majority of schools with polices
    to minimize academic impact reported having mechanisms that allow
    returning students to appeal failing grades and changes to degree
    requirements.

    19The 95 percent confidence interval for the estimated percentage of
    schools that waive application fees is from 73 to 92 percent.

    Figure 9: Estimated Percentage of Schools with Policies to Minimize the
    Academic Impact When Students Return from Active Duty

                                      Conclusions

    Our study showed that most colleges and universities have experienced
    military departures, and schools and lenders have marshaled behind
    servicemembers by putting in place policies and practices to minimize the
    impact of serving their country. Education issued waivers and
    modifications to federal student financial aid provisions to protect this
    population, and states also have laws in place to support them. However,
    critical information to gauge the usefulness of these waivers and
    modifications is missing. Specifically, Education does not have very basic
    information on the extent to which servicemembers are benefiting from the
    waivers and modifications. We know that more than 1.3 million
    servicemembers have been deployed since September 11, 2001, but
    information on the extent to which these individuals are college students
    or have federal student loans and are receiving relief under HEROES is
    unknown. While an impact study of HEROES as Education has interpreted the
    congressional requirement would be difficult and costly to undertake,
    important information such as this could be obtained without using a
    rigorous experimental design. Such information would be important to gauge
    the extent to which those eligible are taking advantage of HEROES and may
    provide Education with information about issues for future study.

                          Recommendation for Executive Action

    To ensure that Congress knows the extent to which the waivers and
    modifications are being used, we recommend that the Secretary of Education
    undertake the congressionally mandated study to determine the extent to
    which eligible servicemembers are receiving assistance under HEROES.

                                    Agency Comments

    We provided copies of a draft of this report to the Department of
    Education and the Department of Defense for review and comment. In written
    comments, the Department of Education agreed with our findings. With
    respect to our recommendation, Education said it has merit and that it
    will explore options for completing the congressionally mandated study.
    Education commented that because highly sensitive national security data
    from DOD would be required, DOD should take the lead in extracting the
    data. Education said it would explore this possibility following
    discussions with Congress and DOD. As we stated and recommended in our
    report, the responsibility for conducting the study resides with
    Education. Education's written comments are in appendix III. DOD had no
    comments on the draft report.

    Copies of this report will be sent to the congressional committees and
    subcommittees responsible for the Higher Education Act, the Secretary of
    Education, the Secretary of Defense, and other interested parties. Copies
    will also be made available to others upon request. In addition, this
    report will be available at no charge on GAO's Web site at
    http://www.gao.gov .

    If you have any questions about this report, please contact me on (202)
    512-7215. Key contributors to this report are listed in appendix IV.

    Cornelia M. Ashby

    Director, Education, Workforce, and Income Security
    Issues

    Appendix I: Methodology for Survey of Colleges and Universities

    To determine what policies or practices colleges and universities have in
    place to assist students serving on active duty, we designed a Web-based
    survey and distributed it to school administrators of 2-year public,
    4-year public, and 4-year private, nonprofit postsecondary schools. The
    survey asked such questions as whether schools had students that left for
    active duty service prior to the end of an academic term and what their
    policies were for refunding tuition and room and board for this population
    of students. The survey included questions about the types of grading
    policies they had in place to accommodate students who left prior to the
    end of the academic term. The survey also asked respondents to report on
    how they assist students when they return from active duty service and
    resume their studies, such as whether the student needed to reapply and
    how the school handled changes in degree requirements. The survey was
    conducted between January and March 2006.

    Sample Design and Errors

    Our sample was drawn using the Department of Education's 2002-2003
    Integrated Postsecondary Education Data System (IPEDS), which contains the
    most comprehensive data on all postsecondary schools.1 Our sample
    consisted of 2-year public, 4-year public and 4-year private, nonprofit
    postsecondary schools that participate in Title IV programs and have an
    undergraduate enrollment of at least 100 students. We drew a stratified
    random sample of 274 schools from the population of 2,974 that met our
    criteria. We selected our sample from four strata defined by size (student
    enrollment) and institution type (2-year public, 4-year public, and 4-year
    nonprofit private schools). Each school had a known probability of being
    selected. We received completed surveys from 75 percent of the 274
    colleges and universities in our sample. Two schools in the sample were
    considered out of scope because of changes to their institutional status.
    The response rate, adjusted for out-of-scope respondents and weighted to
    reflect the population size in each stratum, was 77 percent. The
    population, sample, and survey respondents by strata are shown in table 2.
    We excluded private, for-profit schools from our sample because they
    represent a relatively small percentage of all postsecondary schools.

    1IPEDS is a system of surveys designed to collect data from all primary
    providers of postsecondary education. These surveys collect
    institution-level data in such areas as enrollments, program completions,
    faculty, staff, and finances. Data are collected annually from
    approximately 9,600 postsecondary schools, including over 6,000 schools
    eligible for the federal student aid programs.

    Table 2: Survey of Postsecondary Schools: Population, Sample, and Survey
    Respondents by Strata

                                                     In-Scope schools      Survey
    Strata                      Population Sample        in sample respondents
    4-Year Public, <10K                427     40               39          32
    enrollment
    4-Year Nonprofit Private,        1,208     71               71          56
    <10K enrollment
    2-Year Public, <10K                942     60               59          43
    enrollment
    Enrollment >=10K                   397    103              103          74
    Total                            2,974    274              272         205

    Source: GAO survey of colleges and universities.

    Note: We stratified the schools in our population into these four groups
    to allow us to estimate either school type or school size. Because the
    population consists mostly of schools with an enrollment of less than
    10,000 students (small schools), we sampled schools with more than 10,000
    students (large schools) at a much higher rate. Because of the higher
    sampling rate of large schools and because almost all large schools were
    public, we did not need to further divide the large school stratum based
    on our desired maximum level of sampling error.

    Our probability sample of colleges and universities is only one of a large
    number of samples that we might have drawn. Because each sample could have
    provided different estimates, we express our confidence in the precision
    of the results from our sample in confidence intervals. We are 95 percent
    confident that each of the confidence intervals for the items we examined
    from our survey includes the population value. Unless otherwise noted, all
    percentage estimates from our sample have margins of error of plus or
    minus 10 percentage points or less. We weighted each sampled school in the
    analysis to represent all the members of the population, which allows us
    to generalize the survey responses to the types of higher education
    schools surveyed.

    Nonsampling Errors

    In addition to sampling errors, the practical difficulties of conducting
    any survey may introduce nonsampling errors. Examples of nonsampling
    errors include misinterpretation of questions and errors associated with
    manual data entry processes. We took several steps to minimize nonsampling
    errors. A draft of the survey was pretested with a number of postsecondary
    institution administrators to ensure that the questions were relevant,
    clearly stated, and easy to comprehend. On the basis of pretest findings,
    some slight changes were made to the instrument. All pretests were
    conducted between October and November 2005. Also, using a Web-based
    survey eliminated the errors associated with a manual data entry process
    by allowing school administrators to enter their responses directly into
    an electronic instrument, automatically creating a record in a data file
    for each respondent. While we did not fully verify the extent to which
    schools adhered to their reported policies or practices, we followed up
    with some respondents to obtain additional information about the policies
    they reported. We also contacted respondents, if necessary, to clarify
    answers. Based on these checks, we believe our survey data are
    sufficiently reliable to be used in determining the policies or practices
    schools have in place to assist students who are called to active duty. In
    addition, programs used to analyze the survey data and make estimations
    were independently verified to ensure the accuracy of this work. To
    increase the number of survey respondents, once the Web survey was
    deployed, we followed up with school administrators through e-mail and by
    phone to remind them about the survey.

    To assess the completeness of the IPEDS data, we reviewed the National
    Center for Education Statistics' documentation on how the data were
    collected and performed electronic tests to look for missing or
    out-of-range values. On the basis of these reviews and tests, we found the
    IPEDS data sufficiently reliable for defining our population of schools.

    Appendix II: Waivers and Modifications

    Appendix III: Comments from the Department of Education

    Appendix IV: GAO Contact and Staff Acknowledgments

    GAO Contact

    Cornelia M. Ashby, Director, (202) 512-7215, ashbyc@gao.gov

    Staff Acknowledgments

    Sherri Doughty, Assistant Director

    Debra Prescott, Analyst-in-Charge

    Summer Pachman, Senior Analyst

    In addition to those named above, Avrum Ashery, Susan Bernstein, Karen
    Burke, Nancy Hess, Kevin Jackson, Jean McSween, John Mingus, Jim Rebbe,
    and Rachael Valliere made significant contributions to this report.

    (130488)

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    www.gao.gov/cgi-bin/getrpt?GAO-07-11 .

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    For more information, contact Cornelia Ashby at (202) 512-7215 or
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    Highlights of GAO-07-11 , a report to congressional requesters

    November 2006

    HIGHER EDUCATION

    More Information Could Help Education Determine the Extent to Which
    Eligible Servicemembers Serving on Active Duty Benefited from Relief
    Provided by Lenders and Schools

    Since September 11, 2001, over 1.3 million members of the armed forces
    have been deployed in service to the United States. Congress enacted the
    Higher Education Relief Opportunities for Students (HEROES) Act to
    recognize the needs of those servicemembers who are deployed in the midst
    of pursuing postsecondary education or repaying student loans. GAO was
    asked to determine (1) how the Department of Education has implemented
    HEROES, (2) the policies and practices federal student loan lenders have
    in place to assist borrowers serving on active duty, and (3) the policies
    and practices postsecondary schools have to assist students who are
    serving on active duty. To address these objectives, GAO interviewed
    representatives from the nine largest Federal Family Education Loan
    program lenders, surveyed a random sample of postsecondary schools, and
    visited four colleges and universities.

    What GAO Recommends

    GAO recommends that the Secretary of Education undertake the
    congressionally mandated study to determine the extent to which eligible
    servicemembers are receiving assistance under HEROES.

    Education agreed with the report's findings and said the recommendation
    has merit. Education has agreed to explore options for conducting the
    study.

    Education has issued waivers and modifications to certain federal student
    financial aid provisions to minimize the financial impact and
    administrative burden for servicemembers on active duty, for example, by
    making it easier to postpone or suspend loan payment. Students who leave
    school for active duty service are treated as still enrolled to ensure
    that they do not have to begin repaying their student loans. Borrowers
    already repaying their student loans no longer have to provide written
    documentation of active duty service to suspend repayment for up to 1
    year. However, Education did not complete a study to assess the extent to
    which servicemembers are benefiting from these waivers and modifications
    by March 2005, as required by HEROES, and currently has no plans to do so.
    While HEROES does not specify how Education should go about assessing the
    impact of its waivers and modifications, Education officials said that
    such a study would require a rigorous experimental design that would be
    costly and cannot be supported with Education's data systems. However,
    Education has not explored the possibility of leveraging outside data
    sources to fulfill the requirement.

    Federal student loan lenders have implemented policies and practices, many
    of which are required under Education's waivers and modifications, to
    provide relief for borrowers serving on active duty. For example, lenders
    reported that they provide options that allow borrowers to suspend or
    postpone repayment of their student loans, often with one telephone call.
    Some lenders are providing additional benefits beyond those covered by
    HEROES. For example, one lender offered to forgive $2,500 in loans for
    servicemembers who have lived or attended college in Pennsylvania.

    Most colleges and universities have had students leave for active duty
    service prior to the end of an academic term, and have policies or
    practices to assist them both when they depart and when they return, such
    as providing tuition refunds and allowing them to withdraw from their
    classes. When students return, schools often guarantee their readmission
    and exempt them from changes to degree requirements.

    Selected Options Available to Ease Departure and Return for Students on
    Active Duty
    *** End of document. ***