Federal Student Aid

One of the most significant provisions of the 1998 Reauthorization of the Higher Education Act was the creation of a Performance Based Organization, Federal Student Aid (FSA), within the U.S. Department of Education (the Department).  FSA is a discrete management unit responsible for managing the operational functions supporting the Title IV programs (Title IV covers all operations dealing with post-secondary institutions, including FFEL Program loans, direct loans, Pell grants, etc.).  The U.S. Department of Education, Office of Inspector General engaged LEC to evaluate the appropriateness and effectiveness of internal control over selected aspects of FSA operations, in accordance with the Government Accountability Office’s (GAO) Standards for Internal Control in the Federal Government and Internal Control Management and Evaluation Tool and the Office of Management and Budget’s (OMB) Circular A-123, Management’s Responsibility for Internal Control, and internal controls generally. 
The engagement covers the following FSA’s operations that are considered highest priority for internal control reviews:

• Federal Family Education Loan (FFEL) Program Lender Oversight – Evaluation of FSA’s controls to ensure that lenders are performing in accordance with relevant laws, regulations, and guidance, and lender billings are accurate.

• FFEL Program Guaranty Agency Oversight – Evaluation of FSA’s controls to ensure that guaranty agencies are performing in accordance with relevant laws, regulations, and guidance, and guaranty agency billings are accurate.

• FFEL Program Loan Servicer Oversight – Evaluation of FSA’s controls to ensure that loan servicers are performing in accordance with relevant laws, regulations, and guidance, and that loan collections are maximized.

• FFEL & Direct Loan Programs Loan Consolidation Oversight – Evaluation of FSA’s controls over the consolidation process to ensure loans are consolidated in accordance with laws, regulations, and guidance.

• Pell Grant Program Oversight – Evaluation of FSA’s controls to ensure that institutions and contractors appropriately administer the Pell Grant Program.

• Direct Loan Program Oversight – Evaluation of FSA’s controls to ensure that institutions and contractors appropriately administer the Direct Loan Program.

• FFEL and Direct Loan Programs Oversight of Collection Agency Contractors – Evaluation of FSA’s controls over the collection agency contractors to ensure that the contractors are performing in accordance with laws, regulations, and guidance, and as required by the contracts.

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