Home News OIG Foresees Continued Issues With ED’s Improper Payments, FSA Oversight – NASFAA

OIG Foresees Continued Issues With ED’s Improper Payments, FSA Oversight – NASFAA

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The Department of Education (ED) may continue to struggle with improper payments and oversight and monitoring within the Office of Federal Student Aid (FSA) heading into the new year, according to ED’s Office of Inspector General (OIG). However, in its annual report highlighting management issues, OIG wrote that it will be reassessing whether these issues persist as ED works to improve its correction plans for improper payments, reduce verification issues, and more closely monitor loan servicers, among other efforts.

According to the Improper Payments Elimination and Recovery Act (IPERA), federal agencies must review their programs susceptible to improper payments, publish performance reports on those programs, conduct risk assessments, reduce improper payments to less than 10%, and meet annual reduction targets, among other requirements. If an agency fails to meet one requirement, it is considered to have not complied with IPERA.

OIG has repeatedly found ED to be out of compliance with IPERA, prompting ED to change the way it estimates improper payments for the Pell Grant and Direct Loan programs, which it reported has “resulted in significantly lower improper payment estimates.” Specifically, ED is now looking at a larger random sample of more than 5,700 schools and data from compliance audits by external auditors, as opposed to a small sample of just a subset of schools selected for program reviews.

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