With the student loan default rate hovering at about 14 percent, a new audit is questioning why the U.S. Department of Education does not have a plan or strategy for decreasing the national default rate.
A new Inspector General audit found that the department’s in-house student loan default prevention activities were well-intentioned, but without any clear direction or guidance.
“The Department does not have a comprehensive plan or strategy to prevent student loan defaults and thus cannot ensure that efforts by various offices involved in default prevention activities are coordinated and consistent. Without a coordinated plan or strategy, Department management may not be in a position to make strategic, informed decisions about the effectiveness of default prevention initiatives and activities,” it read.
Borrowers are defaulting on their student loans at the highest rates since 1995, according to federal data.
The audit gave the department credit for some of its positive improvements on this front, such as new web tools, financial literacy campaigns and email campaigns to encourage struggling borrowers to enroll in income-based repayment plans. But without coordination, the audit said, the agency is still missing opportunities to decrease the overall default rate.
The audit recommended that the agency “develop a comprehensive default prevention plan that describes the Department’s default prevention strategy, defines the roles and responsibilities of key Department offices and personnel, and establishes performance measures that can be used to assess the effectiveness of the default prevention initiatives and activities identified in the plan.”
Ted Mitchell, the undersecretary of education, responded to the report and said he agreed with most of the findings.
Mitchell wrote in a statement that the department’s default prevention “efforts have been undertaken without a comprehensive plan that clearly outlines roles and responsibilities related to preventing defaults or managing key default-related activities…We agree that a formal plan will increase transparency regarding how the offices’ respective efforts support our overall default prevention strategy.”
