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Office of Federal Student Aid Not Serving Best Interests of Students, Taxpayers

The Subcommittee on Higher Education and Workforce Training, chaired by Rep. Virginia Foxx (R-NC), and the Oversight and Government Reform Subcommittee on Government Operations, chaired by Rep. Mark Meadows (R-NC), today held a hearing to review the Department of Education’s Office of Federal Student Aid (FSA), a performance-based organization responsible for managing the financial aid system. Members learned about a number of weaknesses within the agency that undermine the effectiveness of federal grant, loan, and work-study programs and discussed ways to better serve students, families, and taxpayers.

“In the 1990s, the Government Accountability Office (GAO) designated FSA as a ‘High Risk’ agency with ‘long-standing management problems,’” Chairwoman Foxx said. “To improve the efficiency and effectiveness of FSA … 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.”

“While FSA’s responsibility has increased dramatically, there has not been an increase in accountability,” Chairman Meadows added. “Today, I suspect Washington may receive an F for allowing the Office Federal Student Aid to expand into higher education. I’m not convinced it’s been a healthy endeavor for students, parents, or taxpayers."

As Chairwoman Foxx said, “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.”

“One need not look too deeply to see that FSA is not acting in accordance with its required purposes in its role as a [performance-based organization],” National Association of Student Financial Aid Administrators President Justin Draeger explained. “In some cases, [the agency] acts in ways that directly conflict with its stated purposes.”

Witnesses provided several troubling examples, including a lack of communication with borrowers, colleges and universities, and loan servicers; difficulty streamlining student services; and trouble delivering the appropriate amount of aid to eligible students on time.

“Our work continues to identify problems in FSA’s oversight of participants in the Federal student aid programs, its efforts to identify and reduce improper payments, and its contract management to ensure program integrity and better safeguard taxpayer interests,” said Kathleen Tighe, inspector general for the Department of Education, whose office has been reviewing the effectiveness of federal student aid programs for decades.

“Some FSA guidance and instructions to servicers is inadequate, resulting in inconsistent and inefficient services to borrowers,” said Melissa Emrey-Arras, GAO’s director of Education, Workforce, and Income Security.

Draeger added, “The overall inability to properly plan and report continues to hinder FSA from meeting its obligations to the public and Congress as a performance-based organization.”

If FSA fails to address these problems, Emrey-Arras warned, “there will continue to be areas of inconsistent implementation, and differences between servicers could have financial consequences that hurt borrowers or risk the integrity of the program.”

“When FSA does not ensure that the interests of students are being served, it is also not ensuring the integrity of the Federal student aid programs or that the taxpayers’ interests in postsecondary education are protected,” Tighe said.

“It is clear FSA cannot administer this program,” Chairwoman Foxx reiterated to FSA Chief Operating Officer James Runcie at the end of the hearing. “The problem is with the leadership of the FSA … You are harming the people you are supposed to be helping, and that has to stop."

To learn more about today’s hearing, read witness testimony, or to watch an archived webcast, visit


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