If an eligible borrower experiences difficulty obtaining a subsidized Stafford loan, guaranty agencies are required to provide one. Most but not all guaranty agencies have arrangements in place to provide loans to students that have difficulty obtaining loans. 1.) It is also uncertain how the actions of the 104th Congress, whose leadership has pledged to constrain federal spending, might affect federal student loan programs and the Department’s ability to ensure access. Conclusions

Generally FFELP administrators foresaw little or no risk of widespread loan access problems through fiscal year 1995, the period covered by our review. However, if such arrangements prove inadequate, the Department has several options to ensure students’ access to subsidized loans, which have proved adequate in the few instances in which they were used. It is too early to know with certainty if lenders will continue to provide subsidized loans to eligible borrowers, and this issue may need to be reevaluated in the future. Questionnaire Results

The U.S. General Accounting Office (GAO) is conducting a congressionally requested study on the availability of guaranteed student loans to borrowers. 2. 1. 4. [ ] We have other arrangements. [] Both FFY 1992 and 2. (CONTINUE)
3. Solicit additional lenders not currently in LLR program to provide loans Seek additional guaranty agency funding from non-federal sources to make loans directly Request that the state secondary market seek additional funding to enable it to either make LLR loans or purchase them from the guaranty agency Ask the Department of Education to advance funds to enable the guaranty agency to make these loans Ask the Department of Education to request that Sallie Mae make these loans Ask the Department of Education to make the loans directly Ask the Department of Education for other forms of assistance (PLEASE SPECIFY) _______________________ Make other arrangement(s): (PLEASE SPECIFY) ________________________ Does your agency currently have any verbal (informal) or written (either informal or formal) agreements for LLR loans with participating lenders?
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed how recent legislative changes have affected the availability of federally subsidized Stafford student loans, focusing on: (1) the arrangements guaranty agencies have to provide loans to eligible borrowers; and (2) Department of Education efforts to ensure continued student access to subsidized Stafford loans.

What GAO Found

GAO found that: (1) eligible students will have difficulty obtaining access to subsidized loans due to recent changes to the Federal Family Education Loan program (FFELP) and the introduction of the Federal Direct Student Loan program; (2) most guaranty agencies have made arrangements to provide loans to students that have difficulty obtaining loans; (3) the Department of Education has made arrangements with Sallie Mae and a new guaranty agency to make loans if guaranty agencies are unable to provide guarantees to lenders; (4) although it is difficult to predict how these arrangements will affect loan access after fiscal year (FY) 1995, FFELP administrators believe that there is little or no risk of widespread loan access problems through FY 1995; (5) Education has several options to ensure students' access to subsidized loans if its financial arrangements prove inadequate; and (6) the issue of student loan access may need to be reevaluated in the future, since it is too early to know whether lenders will continue to provide subsidized loans to eligible borrowers.