Government

In 5-Year Plan for Student Aid, Department Promises Better Oversight of Lenders and For-Profit Colleges

September 28, 2010

In a new strategic plan, the Education Department's student-aid arm promises to improve its outreach to students and "intensify efforts" to reduce fraud and abuse in its programs.

The document, "Federal Student Aid: Strategic Plan, Fiscal Years 2011-15,"lays out five "strategic goals" for the department's Office of Federal Student Aid and sets performance targets for each of them for the next five years.

Among other things, it details plans to raise awareness about the availability of federal student aid and to educate students about the costs and benefits of specific postsecondary programs.

The plan also calls for reaching out to students "who would benefit from additional financial assistance to complete their degree or credential," and making the federal student-aid application "even easier to fill out."

"We have to do a better job of making sure students who are eligible for aid know we're here," said William J. Taggart, the office's chief operating officer, in an interview last week.

At the same time, the plan promises increased oversight of for-profit colleges and a greater focus on "the credit risks of the student-loan portfolio."

The Office of Federal Student Aid distributes almost $130-billion in aid a year and administers a loan portfolio valued at $700-billion. With the end of the bank-based lending program, its portfolio of Direct Loans is expected to grow rapidly, from four million loans in 2008 to 29 million by 2015.

Asked how the transition to direct lending is going, Mr. Taggart said that 96 percent of colleges are now in the program. The remaining 4 percent are mostly small vocational schools that typically award fewer than 250 loans a year, he said.