WASHINGTON, D.C. | November 18, 2015 -
We all know the current federal financial aid system is broken. National student loan debt is at an all-time high, and a complex patchwork of grant, loan, and repayment programs has become so difficult to navigate that it often discourages individuals from pursuing a higher education. Students, families, and taxpayers deserve better. That’s why simplifying and improving student aid remains a leading priority as Congress continues its work to strengthen higher education.
Addressing the challenges within the federal financial aid system is an important part of that effort – and one we have discussed extensively in our subcommittee – but that’s not why we are here today. Instead, we are here to examine the agency tasked with managing the system: the Office of Federal Student Aid, or FSA. The agency is responsible for administering every federal loan, grant, work-study, and repayment program under Title IV of the Higher Education Act.
In other words, FSA is in charge of delivering billions of taxpayer dollars to millions of eligible students, as well as managing more than a trillion dollars of outstanding student loan debt. Additionally, the agency is expected to provide guidance about financial aid policies to thousands of colleges and universities and has the authority to revoke an institution’s ability to participate in the aid programs should they not comply with that guidance. Needless to say, FSA plays an enormous role in the higher education system and has the ability to help or disrupt the lives of students.
In the 1990s, the Government Accountability Office designated FSA as a “High Risk” agency with “long-standing management problems.” To improve the efficiency and effectiveness of FSA, and to mitigate the mishandling of limited resources moving forward, Congress in 1998 converted the agency to a performance-based organization that would have to meet specific objectives under the Higher Education Act. Nearly two decades and trillions of dollars later, many would argue FSA is not achieving the intended results. It’s our job to find out why and identify opportunities for reform to ensure taxpayer dollars are well spent and students are well served.
Numerous reports reveal FSA is rife with inefficiencies that have led to a lack of communication with students, institutions, and loan servicers; improper payments; inaccurate reporting of data; failure to ensure borrowers are aware of the repayment options available to them; mismanagement of contractors and vendors; and poor customer service.
After the last comprehensive review of the agency in 2008, the Department of Education’s Office of Inspector General found FSA has failed to meet its responsibility as a performance-based organization, such as developing a five-year performance plan with external stakeholders and publishing annual performance reviews for the agency’s top executives. Due to these and other failures, the Inspector General noted that FSA “has been unable to realize the expected benefits of the initiatives and has hindered its progress in meeting the requirements of the [Higher Education Act].”
This is about more than checking boxes. When FSA fails to fulfill its responsibilities, it jeopardizes our investment in students. We need to demand better. As Congress works to strengthen higher education, we must ensure the Office of Federal Student Aid is serving the best interests of students, families, and taxpayers. I look forward to hearing from our witnesses about how to achieve just that. Thank you for joining us, and thank you, again, Chairman Meadows, for working with us on this important hearing.