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
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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, [email protected]
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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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
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