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The Education Department's Office of Student Financial Assistance has successfully retired the direct routing system that serviced the Federal Direct Loan program, officials said.
| GCN STAFFThe Education Department's Office of Student Financial Assistance has successfully retired the direct routing system that serviced the Federal Direct Loan program, officials said.Since retiring the system in November, the department has been saving up to $1 million every month that it previously had spent keeping the legacy system running, an Education Department spokesman said.But a General Accounting Office report released in January identified multiple security and management weaknesses in the department.The Central Data System was designed to support a multiple loan service environment. It had 12 functions, five of which related to routing information and were eliminated as they were duplicated in other systems that support the loan program, said Kerry Trahan, a manager with contractor Accenture of New York.The remaining seven functions were incorporated into the existing Loan Servicing System and Loan Origination System.'We've only made some programming changes to the systems, but no technical changes,' Trahan said.The Loan Origination System, which accepts electronic data from schools on loan applications, and the Loan Servicing System, which creates new direct loans, run on an HP-UX platform.The department has also built a data warehouse to create a multidelinquency reporting system, Trahan said. The warehouse provides schools with monthly reports on loan applicants. The schools use this information, among other things, to send reminders to applicants on loans and update information on borrowers.The revamp was the first share-in-savings contract in federal government history. Last July, Education contracted with Accenture, then known as Andersen Consulting, to integrate and simplify the system, and keep a percentage of the savings created by the upgrade.Meanwhile, student financial aid programs continue to be at high risk for fraud, waste, abuse or mismanagement because the department lacks the funding and information needed to manage the programs, GAO reported.In a January report titled 'Major Management Challenges and Program Risks,' GAO said although the student loan default rate declined to 6.9 percent in fiscal 1998, defaults still cost the federal government billions of dollars each year'$4.3 billion in fiscal 1999 alone and more than $28 billion in the last 10 years.Continued weaknesses in information systems controls increase the risk of disruption in services and make Education's loan data vulnerable to unauthorized access, inadvertent or deliberate misuse, fraudulent use, improper disclosure or destruction, the report stated.Though Education has planned and begun implementing many actions to resolve its financial management weaknesses, such as purchasing a new general ledger system, acquiring new software tools and improving existing ones, GAO said it is too soon to determine if those measures will be effective.The report concluded that even though Education's performance plans for fiscal 1999 through fiscal 2001 address most of the department's key outcomes, none of its goals address fraud, waste and mismanagement in its financial management system or the high-risk status of its financial aid programs.An Education Department spokesman declined to comment on the report because the investigation was done under the Clinton administration.'We are hoping that the change in the administration and Congress will help the department correct the problems and have a better operating record,' said Dan Lara, spokesman for the House Committee on Education and the Workforce.Though the committee has no plans to hold hearings on the department's problems in the near future, it will continue to monitor the department's programs, Lara said.'This is a transition period. The new administration is taking time to get familiar with the problems that have already been identified,' he said, adding that Rep. John Boehner (R-Ohio), committee chairman, is confident that Education Secretary Rod Paige can make the requisite improvements.
BY PREETI VASISHTHA
Truant borrowers
Loans need protection
(in millions, April 1999 - March 2000)
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Truant borrowers
Loans need protection
 | Through a Web site at www.nslds.ed.gov, Education has created an around-the-clock Web portal from which students can get information about loans. The site taps data from schools, loan guarantee agencies and Education's loan program. |
| Major Programs |
| ' Technology integration. Education plans to expand and ease the use of assistive technology in classrooms. By setting up a Web site this year, the department will provide a resource to help schools, teachers, parents and students access assistive technology resources. After interviewing teachers from nine school districts in nine states, the department will identify the resources required in each state. The site will contain, among other things, information on hardware, software and individual state resources.
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