United States Government Publishing Office publisher pbl distributor dst United States Government Accountability Office author aut Government Organization text government publication eng GAOREPORTS Legislative Agency Publications gao legislative 2010-08-12 U.S. Government Printing Office 2002-03-29 monographic deposited born digital 18 p. GA 1.13:GAO-02-350 https://www.govinfo.gov/app/details/GAOREPORTS-GAO-02-350 P0b002ee180371ee0 f:d02350 DGPO 2010-08-12 2011-03-28 GAOREPORTS-GAO-02-350 machine generated eng fdlp REPORT GAOREPORTS-GAO-02-350 GAO-02-350 Advance payments Direct loans Electronic funds transfer Information disclosure Late payments Loan interest rates Loan repayments Student loans Dept. of Education Direct Loan Servicing System Other Written Product A02892

Since 1999, the Department of Education (Education) has offered a 0.25 percent interest rate reduction to borrowers who agree to an electronic debit (EDA) program. Borrowers pay a lower interest rate, while the federal government receives fewer late payments. Any revenue loss to the federal government from a reduced interest rate would be more than offset by a gain in revenue because some EDA borrowers who had previously paid by check would stop making periodic payments in excess of their scheduled amount due. By ceasing to make these prepayments, these borrowers would not pay off their loans as soon as they would have without signing up for EDA and, therefore, incur additional interest costs over the life of their loans. Although actual EDA enrollments have exceeded original estimates, Education lacks data on prepayment patterns after borrowers enroll in the program. Education has not informed borrowers of the cost implications of EDA participation, nor has it systematically informed borrowers of their prepayment options. GAO estimates that Education saved $1.5 million in administrative costs in fiscal year 2001 because it did not have to mail bills to EDA borrowers. https://www.govinfo.gov/content/pkg/GAOREPORTS-GAO-02-350/html/GAOREPORTS-GAO-02-350.htm https://www.govinfo.gov/content/pkg/GAOREPORTS-GAO-02-350/pdf/GAOREPORTS-GAO-02-350.pdf GAO-02-350 https://www.govinfo.gov/app/details/GAOREPORTS-GAO-02-350 Other Written Product GAO-02-350; Direct Student Loans: Additional Steps Would Increase Borrowers' Awareness of Electronic Debiting and Reduce Federal Administrative Costs; Advance payments Direct loans Electronic funds transfer Information disclosure Late payments Loan interest rates Loan repayments Student loans Dept. of Education Direct Loan Servicing System Title 20 Section 1077(a)(2)(F) 20 U.S.C. 1077(a)(2)(F)