ED MAKES FIRST REAUTHORIZATION APPEARANCE AS DEFAULTS ARE DISCUSSED - Issue 13 - Actions/Style Phrase

Sep 28, 2026

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ED representatives from the Education Department make their first appearance before the House Postsecondary Education Subcommittee to support a new bill targeting student loan default prevention and improved collections. The General Accounting Office evaluates ED’s progress as lukewarm, noting gaps in account collection and limited follow-up actions. The hearing reviews the fifth of 22 planned sessions on reauthorizing the 1965 Higher Education Act and discusses H.R. 2150’s key policy changes, including eligibility and reporting requirements.

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ED MAKES FIRST REAUTHORIZATION APPEARANCE AS DEFAULTS ARE DISCUSSED

H.R. 2150 and hearing context

GAO assessment and collection issues

Proposed legislative measures

Vol.13,No。120 Thursday,June 20,1985 # ED MAKES FIRST REAUTHORIZATION APPEARANCE AS DEFAULTS ARE DISCUSSED Conspicuous in their absence through the first four hearings,representativesof the Education Department yesterday made their initial appearance before theHouse Postsecondary Education Subcommittee,testifying in support of a new billdesigned to help ED curb student loan defaults. At the same hearing,General Accounting Office representatives gave a lukewarmassessment of ED's history in dealing with defaulted loans,although they saidcollection efforts are improving. The testimony came as the subcommittee completed the fifth of 22 planned hear-ings on the reauthorization of the 1965 Higher Education Act.A sixth hearing,also on the federal student loan programs,is scheduled today. While ED did not offer a specific reauthorization package yesterday as,commit-tee Chairman William D.Ford,D-Mich.,has requested,Acting Assistant Secre-tary C.Ronald Kimberling threw enthusiastic support behind H.R。2150,theStudent Loan Collection Improvement Amendments of 1985,introduced April 22 byRep.Thomas Coleman,R-Mo.,ranking minority member of the subcommittee. Among other things,the legislation would make loan checks payable to both thestudent borrower and the postsecondary institution;make students with one loanin default ineligible for further federal aid at any postsecondary institution;require state guarantee agencies to report defaulted loans to guarantee agen-cies;and set a national six-year statute of 1imitations on collection of stu-dent loans. K1mberling said that while ED is"proud"of its recent accomplishments in loancollection,having increased recoveries from $46 million in fiscal 1981 to$91 million in fiscal 1984,the new bill“includes important new measures whichaim at preventing defaults from occurring."Moreover,Kimberling said the b1lldoes not decrease access to the federal loan programs. William Gainer,associate director of GAO's Human Resources Division,told thesubcommittee ED had indeed improved its default collection efforts,and haddone so despite a reduction in staff.But,in its study of ED's National Di-rect Student Loan(NDSL)and Federal Insured Student Loan(FISL)collection ef-forts in 1982,the GAO noted several problems. For example,Gainer said ED had no record of action being taken to collect37 percent of all accounts;made 1imited attempts to collect loans other thansending a computerized demand letter;did not rank loans to be worked on basedon amount;and "transferred a large number of accounts to private collectorswithout any evidence that they had been worked on by the department."(more) June 20,1985 # ED MAKES FIRST REAUTHORIZATION APPEARANCE AS DEFAULTS ARE DISCUSSED(Cont.) A follow-up study in 1983 showed "little overall change,"Gainer said."Although we believe the department's recent changes are positive steps inimproving the collection process,it is too early to tell whether they willresult in improved collections." ED's efforts in going after 15,000 loan defaulters through the courts have beenheavily publicized(HED,April 5)。But Gainer said both ED and the JusticeDepartment had agreed at the time with GAO's suggestion that 50,000 cases besent to the Justice Department by Sept.30. Optimistic Goal"If Education continued to transfer cases to Justice atthis rate,it would be below that needed to reach 50,000 cases by Sept.30,"Gainer said."Education has since readjusted its estimate and hopes to referapproximately 16,200 cases by that date.The department believes the originalgoal was very optimistic." In other testimony yesterday,H.R.2150 received support from a member of theother house.Sen.Dan Quayle,R-Ind.,said the measure would help improve astudent loan system that is already working quite well. Quayle,who has cosponsored an identical loan collection bill in the Senate,S.491,said discussion on federal student loan programs "should not be on howbad or good"they are,but o

FAQs

What is the purpose of H.R. 2150 mentioned in the hearing?

It is designed to help the Education Department curb student loan defaults by improving collection and prevention measures.

How did GAO evaluate ED’s history in dealing with defaulted loans?

GAO gave a lukewarm assessment, acknowledging improvement but identifying several collection problems in earlier studies.

What changes does the legislation propose for defaulted loan handling?

Among other measures, it would make checks payable to both borrowers and institutions, restrict future federal aid for certain defaulters, require reporting of defaults, and set a six-year statute of limitations.

Sep 28, 2026

Uploaded by dhado