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OIG Report Highlights Management Challenges for ED

By Hugh T. Ferguson, NASFAA Staff Reporter 

In a recently released report from the Department of Education’s (ED) Office of Inspector General (OIG), the internal watchdog identified five specific vulnerabilities that could seriously impact the department’s ability to carry out its goals while at the same time mitigating waste and mismanagement.

The internal audit is part of an annual process which requires ED to detail its most serious management and performance challenges and highlight the ways in which the agency can best address departmental processes.

According to OIG’s analysis, these most recent challenges stem from managing improper payments, implementing pandemic relief laws, oversight and monitoring, data quality and reporting, and information technology security.

When it comes to management of improper payments, OIG found that in fiscal year 2020 the Pell Grant and the Direct Loan programs continued to be susceptible to significant improper payments.

OIG’s review of ED’s compliance with improper payment reporting requirements for fiscal year 2020 found that the department did not comply with the Payment Integrity Information Act (PIIA) because it did not meet two of the six compliance requirements.

Specifically, ED did not demonstrate improvement in reducing improper payments in the Direct Loan program. In addition, OIG found that ED reported improper payment rates that exceed 10%  percent for the Temporary Emergency Impact Aid for Displaced Students (EIA) and Restart programs.

In the last 18 months, ED has also been tasked with monitoring a slew of new grant programs and federal education funds created with more than $280 billion in emergency aid through three pandemic relief laws, implementing additional student financial assistance program requirements, and ensuring that quality data are reported.

In order to effectively work through those emergency programs, the report called on ED to design and implement related processes timely and effectively to help ensure the overall success of its pandemic relief activities.

In addition to the programs funded by the pandemic relief laws, the report noted that ED must oversee more than 100 other grant and loan programs, including a federal student loan portfolio of about $1.5 trillion, further demonstrating the challenge of ensuring oversight of new funds as well as carrying out requirements of pre-pandemic portfolios.

The report urged ED to assess its pandemic relief programs by evaluating the results of its monitoring efforts and information reported back from recipients to identify potential problem areas or areas that could benefit from additional guidance or technical assistance.

In order to implement the student financial assistance-related statutory provisions, waivers, and flexibilities, OIG also called on ED to continue to provide guidance to and work with postsecondary institutions, contracted servicers, collection agencies, guaranty agencies, and accrediting agencies.

On effective oversight and monitoring, the report highlighted the challenges student financial assistance programs faced with Federal Student Aid (FSA) directly managing a massive loan portfolio, representing about 212 million student loans more than the 45 million borrowers. Additionally, FSA is tasked with overseeing more than 5,600 postsecondary institutions that participate in federal aid programs.

“While FSA’s Next Gen initiative has significant potential to improve FSA’s ability to oversee and hold accountable its key contractors servicing Federal student aid, it will be important for FSA to ensure that this initiative is effectively implemented, and once in place that it follows through to hold its contractors accountable for effectively administering their responsibilities,” the OIG report said while also indicating actions by FSA have been responsive to previous reports.

Concerning data quality and reporting, OIG found a variety of weaknesses in the quality of reported data and recommended improvements, citing issues with data concerning the Clery Act, disaster recovery, and pandemic relief.

“While the Department has made progress in strengthening grantees’ data quality processes, we continue to report findings in this area,” the report concludes. “The Department should continue its efforts to promote strong data management practices across its program offices, from the development of sound data collection protocols to the implementation of comprehensive data verification processes.”

As of Sept. 30, 2021, ED reported more than $1 billion in total information technology (IT) spending for fiscal year 2021, and OIG noted that ED and FSA made progress in strengthening their information security programs. However, on the issue of cybersecurity, OIG urged ED to increase the effectiveness of its information security program to fully comply with all applicable requirements and ensure five security functions (Identify, Protect, Detect, Respond, and Recover) were more effective.

“While we commend the Department for its efforts to address weaknesses and improve its IT security program, we continue to identify significant weaknesses in our annual [Federal Information Security Modernization Act (FISMA)] audits — despite the Department’s reported corrective actions to address our prior recommendations,” the OIG report found.

 

Publication Date: 12/20/2021


Rachelle F | 12/22/2021 10:18:32 AM

So this is all based on reviewing one school with a nonstatistical random sample?? Professional Judgment In the first of a series of audit work in this area, we found that a school did not
adequately document special circumstances for more than 90 percent of the
students in our nonstatistical random sample for whom it applied professional
judgment. Because the school did not adequately document special circumstances,
its application of professional judgment was not in accordance with the Higher
Education Act of 1965, as amended.

David S | 12/20/2021 10:22:06 AM

If it's any consolation, turns out that the student loan agency in the UK also uses antiquated and inadequate technology that leaves data vulnerable and makes maintaining the accuracy of records a challenge. So we're not alone...but the volume of student loans in the UK is a "mere" 200 billion pounds, they're nowhere near our $1.5 trillion.

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