Online student loan system is lagging, GAO says

Systems being developed to streamline processing of federal student aid and related data are in some cases nearly a year behind schedule, a just-published General Accounting Office study concludes.

The study also found that “very serious” operational problems threaten progress on the systems, designed to make it easier and faster for students to ask for loans and grants via the Internet, and for colleges, lenders and the Education Department to track applications and payments.

Education started work on the Common Origination and Disbursement process, known as COD, in late 1999 to link and merge information from dozens of legacy systems with disparate operating software.

Each year, federal student aid programs funnel about $50 billion to 8 million students at 5,500 colleges and universities.

Even though the GAO noted progress in using middleware and Extensible Markup Language, it said Education’s Office of Federal Student Aid “is not fully tracking whether it is achieving certain expected benefits, such as increased customer satisfaction” and that participating colleges were not being kept informed of lessons learned in the system development.

The study said only 75 percent of COD’s basic system requirements were in place in October. In a response to GAO, the Office of Federal Student Aid estimated 85 percent to 90 percent of the system’s “functionality was implemented.”

“Critical work remains,” GAO investigators wrote.

Accenture LLP of Chicago, the prime contractor, reported to GAO that it is fixing operational problems, including improperly processed batches of data from colleges that contained multiple change-records for students. Software design defects and unclear requirements caused some of the problems, GAO said.

“There were some startup issues (as to be expected) with any project of this nature,” said Steve Shane, an Accenture partner. “It was a rocky start.” One of the biggest challenges was working with a large number of schools, each with diverse computer systems, he said.

Shane said the system is being improved and users, as well as universities, “have seen a better response. They have a lot more flexibility.”

In addition, Shane said, “they are on track for achieving the 19 percent to 20 percent cost reduction” first envisioned.

To read the GAO report, click here.

(Updated Jan. 13, 2003, 10:00 a.m.)

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