Web clearinghouse for student loans not needed, GAO says

Congress suggested online tool to help students compare available loans

The Government Accountability Office has put the brakes on Congress' idea for an federal online clearinghouse to allow students to compare available education loans.

Creating such a clearinghouse on the Education Department's website would be expensive and difficult to deploy and may not be necessary, according to a GAO report published on Sept. 29.

“While it would be feasible for Education to establish a student loan tool on its website, the need for such a new source of information is questionable,” the GAO report states.

Under the Higher Education Opportunity Act II, lawmakers required GAO to study the feasibility of developing the national website offering real-time information, such as interest rates and loan terms, for federal and private student loans.


Related stories:

Education Department sets up new website for data display

National Education Technology Plan in line for an update


Education could develop such a clearinghouse, with either basic information, more detailed information or personalized information that required prospective borrowers to input their personal data, GAO said.

However, several problems stand in the way of creating such a Web tool such as getting lender cooperation to present complete, accurate and objective information on all available loans consistently, GAO said, adding that such a clearinghouse would be costly to establish and maintain.

"The agency would have to cover the cost of contracting to develop a tool and build a secure system to house it. Education officials and two lenders noted that constantly evolving loan rates and terms would make the tool expensive to maintain. In a customized tool, Education would incur a cost for obtaining each borrower’s credit score," the report states.

Meanwhile, private lenders publish similar information, and schools and other agencies also provide loan information.

GAO did acknowledge that many students have low levels of “financial literacy” and may have difficulty understanding basic loan terms and comparing loans without further guidance.

“Any perceived need for a federal tool must be weighed against the investment required of Education and the considerable challenges inherent in implementation,” GAO concluded.

Education agreed with the findings.

About the Author

Alice Lipowicz is a staff writer covering government 2.0, homeland security and other IT policies for Federal Computer Week.

Featured

  • FCW PERSPECTIVES
    sensor network (agsandrew/Shutterstock.com)

    Are agencies really ready for EIS?

    The telecom contract has the potential to reinvent IT infrastructure, but finding the bandwidth to take full advantage could prove difficult.

  • People
    Dave Powner, GAO

    Dave Powner audits the state of federal IT

    The GAO director of information technology issues is leaving government after 16 years. On his way out the door, Dave Powner details how far govtech has come in the past two decades and flags the most critical issues he sees facing federal IT leaders.

  • FCW Illustration.  Original Images: Shutterstock, Airbnb

    Should federal contracting be more like Airbnb?

    Steve Kelman believes a lighter touch and a bit more trust could transform today's compliance culture.

Stay Connected

FCW Update

Sign up for our newsletter.

I agree to this site's Privacy Policy.