84.032 FEDERAL FAMILY EDUCATION LOAN PROGRAM (FFEL) - GUARANTY AGENCIES
state guaranty agencies are established to guarantee student loans
made by lenders and perform certain administrative and oversight
functions under the Federal Family Education Loan (FFEL) Program,
which includes the Federal Stafford Loan, Federal PLUS, Federal
SLS and Federal Consolidation loan programs. The Department of Education
(ED) provides reinsurance to the guaranty agency.
in the FFEL programs and to receive various payments and benefits
incident to that participation, a guaranty agency enters into agreements
with ED. As part of these agreements, guaranty agencies are required
to: provide preclaims assistance to lenders when requested; service
defaulted loans that have been submitted to them; make timely claim
payments to lenders; make timely reinsurance filings with ED; provide
accurate and reliable reports to ED; establish and maintain FFEL
program reserve fund in accordance with 34 CAR section 682.410(a),
including the making of proper investments, apply proper charges
to defaulted borrowers, and take proper enforcement measures with
respect to lenders, lender services, and defaulted borrowers. The
primary regulations relating to Guaranty Agency requirements are
located in 34 CFR 682, Subparts C, D, F and G.
Activities Allowed or Unallowed
requirements and suggested audit procedures for allowed and unallowed
services are presented separately in Compliance Requirement number
11 (Reserve Fund Assets) in Section E, Special Tests and Provisions.
Financial Reporting - Not applicable
Performance Reporting - Not applicable
a. ED Form
1189, Guaranty Agency Monthly Claims and Collections Report
(OMB No. 1840-0582)
b. ED Form
1130, Guaranty Agency Quarterly/Annual Report (OMB No. 1840-0003)
c. ED Form
704, Guarantor Projection Model (OMB No. 1840-0704) (34
CFR section 682.414)
which amounts to test, particular attention should be given to the
September 30 amounts for current year defaults, current year collections,
loans receivable and the sources and uses of funds for the reserve
account. Also, guaranty agencies are required to submit loan level
detail information to the National Student Loan Data System (NSLDS)
(OMB 1840-0537). When reviewing support for the above reports, the
auditor should consider whether the relevant amounts in these reports
reconcile with the NSLDS Extract submitted by the guaranty agency.
(NOTE: There may be some differences between ED Form 1130 quarter
end reporting and NSLDS Extracts due to timing factors (e.g., polling
of NSLDS Extract in third week vs. month end). Finally, ED may send
edits back to the agency to be entered.
agency is required to submit loan level detail data to the NSLDS.
The following are identified as key data elements: social security
number, last name (some agencies may use first name combined with
the SSN since last names are subject to change), original school
code, academic level, current school code, enrollment status code,
enrollment status date, originating lender code, loan guarantee
date, amount of guarantee, current holder lender code, date entered
repayment, loan status code, loan status date, amount of claim paid
to lender (principal and interest) and for loans with a defaulted
status--outstanding principal, interest and fee amounts. ED sends
edits back to the guaranty agency for disposition. Samples should
be selected from the guaranty agency's NSLDS Extracts (Note: Guaranty
Agencies may have changed to automated exchanges of data with schools
and lenders, thus, hard copy documents may not exist. In this instance,
auditors may only be able to trace to system information and not
to supporting records.) (34 CFR section 682.414).
(Note: In addition
to providing ED with information it needs to maintain its accounting
and loan database records, data in the ED Form 1130 reports are
used for various purposes by ED. The use of this data is the subject
of several other compliance requirements cited in Section N., Special
Tests and Provisions, which identify the need to test specific items
in these reports. For audit efficiency, the auditor may want to
test those compliance requirements at the same time as this compliance
requirement. These other compliance requirements are "Transition
Support," "Federal Reinsurance Agreement," and "Reserve Fund Assets.")
Special Tests and Provisions
Requirement - The guaranty agency shall maintain current
complete records for each loan that it holds. The records must be
maintained in a system that allows ready identification of each
loan's current status, updated at least once every 10 business days.
Objective - Determine whether the agency's records are
updated for information received from lenders, schools, borrowers,
others, and NSLDS on a timely basis.
a. For a sample
of loans, compare dates transactions or information were posted
to the guaranty agency's system to the date the source information
whether any backlog exists that is over 10 days old.
Requirement - Beginning on October 1, 1994, section 458
of the Higher Education Act (HEA) (20 USC 1087(f)) authorized ED
to obligate funds for administrative expenses of guaranty agencies
in servicing outstanding loans in their portfolios and in guaranteeing
new loans. This discretionary authority replaced the requirement
in Section 428(f) (20 USC 1078(f))of the HEA that entitled each
guaranty agency to an administrative cost allowance (ACA) equal
to one percent of the total principal amount of loans (other than
Consolidation loans) guaranteed by the agency during that fiscal
year. For FY 1995 ED announced that "transition support" would be
paid using the formula for ACA. Each year ED will announce the method
for calculating transition support. Past problems found include:
(1) agencies have established an account receivable for transition
support allowance based on estimates and then failed to reconcile
the receivable with the actual transition support paid; (2) agencies
have estimated the amounts reported as unconsummated loans (ED will
not pay transition support based on estimates); (3) agencies have
reported adjustments that belonged in prior fiscal years in the
current fiscal year instead of submitting corrections to the prior
year reports; and, (4) agencies have included rejected applications
two or more times in the loans guaranteed calculation (HEA Section
458) (20 USC 1087(f)).
Objective - Determine whether data reported to ED that
is used to calculate "transition support" is supported by guaranty
method for calculating transition support. If ED's calculation uses
data contained in the reports cited in the Section L. "Reports"
above, follow the suggested audit procedures for that requirement.
(This is the case if ED uses the ACA formula.) If other data is
reported by the guaranty agency for the purpose of determining the
amount of "transition support," trace the data to supporting books
Federal Reinsurance Rate
Requirement - When the total amount of reinsurance claims
paid by the Secretary to a guaranty agency during any fiscal year
is less than five percent of the amount of loans in repayment at
the end of the preceding fiscal year, the reinsurance is paid for
100 percent of the agency's losses. For loans made on or after October
1, 1993, the rate drops to 98 percent. When the total reinsurance
claims paid by the Secretary to a guaranty agency during any fiscal
year reach five percent of the amount of loans in repayment at the
end of the preceding fiscal year, the reinsurance subsequently paid
to the guaranty agency during that fiscal year, for loans made before
October 1, 1993, or transferred under a plan to transfer guarantees
from an insolvent guaranty agency approved by ED, equals 90 percent.
For loans made on or after October 1, 1993, the rate drops to 88
percent. When claims reach nine percent, the reinsurance drops to
80 percent for loans made prior to October 1, 1993, or transferred
under a plan to transfer guarantees from an insolvent guaranty agency
approved by ED, and 78 percent for loans made on or after that date.
uses the ED Form 1130 quarterly report for the previous September
30 to calculate the amount of loans in repayment at the end of the
preceding fiscal year (34 CFR sections 682.404(b) & (c)).
areas have been:
- not established
systems to verify a student's loan status with lender and school
data through a reliable audit trail.
systems to determine loan status that rely on loan characteristic
analysis or assumptions that are not adequately tested or verified.
- not established
adequate procedures to ensure that lenders report and that agencies
properly record loans paid in full.
- not established
adequate procedures to ensure that there is a system to reconcile
the agency's repayment conversion dates to the lender's repayment
Objective - Determine whether the data submitted to ED
in the September 30 Form 1130 used to calculate loans in repayment
is materially correct and supported by the books and records.
the amounts of loans in repayment in the guaranty agency system
at September 30 to the amount of loans in repayment derived from
the September 30 ED Form 1130. Determine the propriety of any difference.
b. Select a
sample of loans in in-school and repayment status from the guaranty
agency's system. Verify the loan amount and loan status by contacting
the current holder of the loan or schools to confirm the authenticity
and status of the loans.
Conditions of Reinsurance Coverage
Requirement - A guaranty agency is entitled to reinsurance
payments on a loan only if the requirements cited in 34 CFR section
682.406 are met. The lender must provide the guaranty agency with
documentation, as described in 34 CFR sections 682.406 and 414.
The Secretary requires a guaranty agency to repay reinsurance payments
received on a loan if the lender or the agency failed to meet these
requirements (34 CFR section 682.406).
areas have been:
- Did not exercise
due diligence in servicing the loan in accordance with 34 CFR section
- Did not include
adequate documentation, including a collection and payment history,
to adequately verify claim eligibility and claim amount;
- Did not file
a default claim with the guaranty agency within 90 days of default
(Note: The guaranty agency shall reject the claim based on due diligence
or timely filing violations, unless it was cured by the lender in
accordance with Cure Bulletin 88-G-138.); and
- Was paid
interest beyond 30 days after a claim was returned for inadequate
documentation for claims returned on or after July 1, 1996.
- Filed a
request for payment of reinsurance later than 45 days following
payments of a default claim to the lender;
- Did not pay
the lender within 90 days of the date the lender filed the claim?
- Did not pay
the lender prior to filing a request for payment from ED.
Objective - Determine whether loans for which reinsurance
was paid met the requirements for reinsurance.
Select a sample
of defaulted loans from the guaranty agency's ED Form 1189 reports.
Review documentation supporting that the loans met the conditions
Death, Disability, and Bankruptcy Claims
Requirement - If an individual borrower dies, the obligation
of the borrower and any endorser to make any further payments on
the loan is canceled, in accordance with 34 CFR sections 682.402(b)(2-5).
If the lender determines that an individual borrower is totally
and permanently disabled, the obligation of any further payments
on the loan is canceled in accordance with 34 CFR sections 682.402(c)(1-4).
If a borrower files a petition of relief under the Bankruptcy Code,
the Secretary reimburses the holder of the loan for unpaid principal
and interest on the loan, in accordance with 34 CFR sections 682.402(f),
(g), and (h). Exceptions to these regulations are identified in
34 CFR sections 682.402(a)(2) and (3).
A lender must
file a death, disability or bankruptcy claim within the period prescribed
in 34 CFR section 682.402(g)(2). The guaranty agency shall review
a death, disability, or bankruptcy claim promptly and shall pay
the lender in accordance with 34 CFR section 682.402(h). Guaranty
agencies are required to take specific actions in bankruptcy proceedings
in accordance with 34 CFR section 682.402(i). In accordance with
34 CFR section 682.402(k)(1)(i), the guaranty agency shall not request
payment from ED until the lender's claim has been paid (34 CFR section
Objective - Determine whether death, disability and bankruptcy
claims met the requirements for the payment of such claims.
Select a sample
of death, disability, and bankruptcy claims from the guaranty agency's
ED Form 1189 reports. Review claim documentation that supports the
eligibility of the claims for payment.
Preclaims and Supplemental Preclaims Assistance
Requirement - Upon receipt of a request from the lender,
a guaranty agency shall engage in preclaims assistance activities
on a delinquent loan prior to the loan entering default status (NOTE:
Effective July 1, 1997 preclaims assistance is to be made available
to the lender no later than the 90th day of delinquency). The assistance
must include collection activities that are at least as forceful
as the level of preclaims assistance performed by the guaranty agency
as of October 16, 1990, and involves the initiation by the guaranty
agency of at least three collection activities, one of which is
a letter designed to encourage the borrower to begin or resume repayment.
When the borrower
is at least 120 days delinquent and upon receipt of a request from
the lender, the guaranty agency shall exercise supplemental preclaims
assistance (SPA) activities on the delinquent loan prior to a claim
being filed with the guaranty agency. The activities must be clearly
supplemental to preclaims assistance. The efforts involve the agency
initiating at least two collection efforts designed to encourage
the borrower to begin or resume payment. The Secretary pays the
guaranty agency one percent of the total of the unpaid principal
and the accrued unpaid interest for each loan on which SPA was performed
and that was not submitted as a default claim by the lender on or
before 150 days after the loan became 120 days delinquent.
who performs SPA for a guaranty agency may not subsequently collect
on the same loans in the event of default. The contractor may collect
only on those loans for which it did not provide SPA (34 CFR section
Objective - Determine whether the guaranty agency performed
preclaims and SPA in accordance with the requirements and to determine
whether loans for which the guaranty agency received payment for
performing SPA were not submitted by the lender as default claims
within 150 days after the loan became 120 days delinquent.
a. For a sample
of loans, review documentation supporting that the agency performed
the required collection activities for preclaims assistance and
SPA as described above.
b. For a sample
of loans on which SPA was performed and the one percent payment
was requested on the ED Form 1189, review loan records to ensure
the loan was not submitted for a default claim prior to 150 days
after the loan became 120 days delinquent.
c. If the guaranty
agency contracts with an entity to provide SPA on defaulted loans,
review contract documents and loan records to ascertain if the same
entity is not performing collection services for the same loans.
Standard Collection Efforts
Requirement - Unless the agency uses alternative collection
procedures (see next section for alternative collection procedures),
the guaranty agency must engage in certain collection activities
within certain time frames as prescribed by 34 CFR section 682.410(b)(6)
on a loan for which it pays a default claim filed by a lender. These
collection activities include written notices, contacts with borrowers,
and wage garnishments, etc (34 CFR section 682.410 (b)(6)).
Objective - Determine whether the agency performed required
collection procedures on defaulted loans.
a. If the guaranty
agency uses a collection contractor, review the contract to ascertain
if the contract specified the required collection procedures to
be followed for defaulted loans.
b. For a sample
of defaulted loan accounts, review documentation that supports that
prescribed collection activities were followed.
Alternative Collection Efforts
Requirement - A guaranty agency may engage in the following
collection activities in lieu of the activities described above
in the Standard Collection Efforts section. The regulations at 34
CFR sections 682.410 (b)(6)(ii)(A) and (B) apply to the periods
of time set forth in this Alternative Collection Efforts section.
Upon receipt of a payment from a borrower, the agency is not required
to follow the specific collection efforts described below, but shall
diligently attempt to collect the loan for 60 days following receipt
of the payment. If the agency receives no payments during the 60-day
period, the agency shall resume its use of the collection efforts
described below, treating the first day after the end of the 60-day
period as the first day of the period described in the 31-180 day
period below (34 CFR section 682.410 (b)(7)).
- 1 - 30
period the agency shall send to the borrower the written notice
described in 34 CFR section 682.410 (b)(5)(ii).
- 31 - 180
period the guaranty agency shall attempt diligently to collect the
loan using such collection tools and activities as it deems appropriate,
provided, however, that the agency must make at least one diligent
effort to contact the borrower by telephone, as defined in 34 CFR
section 682.411(l) (with references to "the lender" understood to
mean "the agency"), and send at least two forceful collection letters
to the borrower. By the end of this period, the agency shall refer
the loan to a collection contractor in accordance with 34 CFR section
682.410(b)(7)(iv)(C). The collection contractor to whom the agency
refers a loan under 34 CFR section 682.410 (b)(7)(iv)(B) must: (1)
be compensated for its services on all FFEL loans referred by the
agency solely on a contingency fee basis; (2) be one of at least
two collection contractors simultaneously providing collection services
to the agency on FFEL loans under a competitive system that the
agency has established and that includes the periodic assessment
by the agency of the performance of the competing contractors and
periodic adjustments in the volume of loans referred by the agency
to each competing contractor based on those assessments; and, (3)
not receive referral of more than 70 percent of the agency's referred
loans in any calendar year.
the deadline for instituting a civil suit set forth in 34 CFR section
682.410 (b)(6)(vii), an agency that uses the procedures in 34 CFR
section 682.410 (b)(7)(i)-(iv) shall institute a civil suit required
by that paragraph prior to the earliest of the 90th day following
the collection contractor's return of the loan to the agency or
the 365th day following the later of the agency's referral of the
loan to the collection contractor, or the contractor's receipt of
a payment on the loan.
Objective - Determine whether the agency that chose to
follow alternative collection procedures complied with the applicable
a. For a sample
of defaulted loan accounts, review documentation that supports that
the agency performed the prescribed collection activities before
referring the loans to the collection contractors.
b. Review collection
agency contracts and loan referral records to ascertain if the agency
(1) did not refer more than 70 percent of its referred loans
to a single collection contractor, and (2) compensated the contractors
only on a contingency fee basis.
c. Review records
demonstrating that the guaranty agency periodically assessed the
performance of the competing contractors, and if necessary, made
adjustments in the volume of loans referred to each competing contractor.
Federal Share of Borrower Payments
Requirement - If the borrower makes payments on a loan
after the guaranty agency has paid a claim on that loan, the agency
must pay the Secretary an equitable share of those payments. The
Secretary's equitable share is the portion of payments that remains
(1) The complement
of the reinsurance percentage in effect when reinsurance was paid
on the loan (10 percent if defaults exceed five percent,
or 20 percent if default exceeds nine percent. For loans made after
October 1, 1993, the complement of the reinsurance rate is two percent,
12 percent when claims reach five percent, and 22 percent when claims
reach nine percent), and
(2) 27 percent
of borrower payments.
have been rehabilitated or paid by FFEL program consolidation loans
consolidated are not covered by this requirement because the payoff
amounts are not considered "payments made by the borrower." For
these loans, under separate authority, agencies are allowed to retain
collection costs added to the borrower's balance, not to exceed
18.5 percent of the payoff.)
Secretary approves otherwise, the guaranty agency must submit the
Secretary's equitable share of borrower payments within 45 days
of the receipt of the payments by the agency or its servicer (34
CFR section 682.404 (g)) (NOTE: For payments received prior to February
1, 1993, the agency shall submit payments within 60 days of receipt.
However, see Dear Colleague Letter 95-G-286.) (Section 428(c)(1)(D)
(20 USC 1078(c)(1)(D)) and Section 428(c)(6) (20 USC 1078(c)(6))
of the HEA, March 19, 1994 Dear Guaranty Agency Director Letter).
Objective - Determine whether the Secretary's equitable
share of borrower payments on defaulted loans is properly computed
and remitted to the Secretary in a timely manner.
Test a sample
of borrower payments on defaulted loans to ascertain if the equitable
share due ED was remitted to ED in a timely manner.
Assignment of Defaulted Loans to ED
Requirement - Unless the Secretary notifies an agency in
writing that other loans must be assigned to the Secretary, an agency
must assign any loan that meets all of the following criteria as
of April 15 of each year: (1) the unpaid principal balance is at
least $100; (2) the loan, and any other loans held by the agency
for that borrower, have been held by the agency for at least four
years (five years for fiscal years beginning July 1, 1997); (3)
a payment has not been received on the loan in the last year; and,
(4) a judgement has not been entered on the loan against the borrower.
The Secretary may also direct a guaranty agency to assign to ED
certain categories of defaulted loans held by the agency as described
in 34 CFR section 682.409. In determining whether mandatory assignment
from a guaranty agency is required, the Secretary will review the
adequacy of collection efforts. ED considers the agency's record
of success in collecting its defaulted loans, the age of the loans,
and the amount of any recent payments on the loans. This assignment
authority is established by the Higher Education Amendments of 1992
(Section 428(c)(8) of the Higher Education Amendments of 1992 (20
USC 1078(c)(8))) (34 CFR section 682.409).
Objective - Determine whether the agency assigned to ED
all loans that meet the criteria.
Review an aging
of the guaranty agency's loans to ascertain if it is holding loans
that, in accordance with the criteria or its approved assignment
schedule should be assigned to ED.
Reserve Fund Assets
Requirement - The guaranty agency shall establish and maintain
a reserve fund to which it shall credit funds received from a State
or any other source for the agency's guaranty activities, including
matching funds under section 422(a) of HEA (20 USC 1072(a)), SPA
payments, reinsurance receipts, collections on defaulted loans,
insurance premiums, administrative cost allowance receipts, earnings
on investment of reserve funds, and Federal advances obtained under
sections 422(a) and (c) (20 USC 1072(a) and (c)). The agency is
also required to deposit into the reserve fund a fair percentage
of the fair market value of any asset that was converted to a use
unrelated to its guaranty activities, if a portion of the cost of
developing and maintaining the asset was not allocated to other
than reserve funds.
of the reserve fund may be used only to pay insurance claims, operating
costs of guaranty activities, lenders for participation on loan
referral service, the Secretary's equitable share of collections,
refund of Federal advances/other funds owed to the Secretary, reinsurance
fees, insurance premiums, borrower refunds, repayment of certain
amounts received from the State or other sources, and other necessary
payments directly related to guaranty activities. Repayments to
the State of funds previously received are only allowed if (1) the
agency provides the Secretary 30 days prior written notice, (2)
the agency demonstrates with appropriate contemporaneous documentation
that the amounts were originally received on a temporary basis only,
(3) the objective for which the amounts were originally received
has been fully achieved and (4) repayment would not cause the agency
to fail to comply with the minimum reserve levels. Effective for
contracts negotiated after January 13, 1995, the agency must provide
ED with written notice 30 days before making any capital expenditure
of more than five percent of the agency's reserve fund balance.
Effective May 6, 1996 this requirement applies to expenditures for
information systems, whether classified as capital or operating
expenditures. The guaranty agency shall account separately for the
sources and uses of funds in the reserve fund (34 CFR sections 682.410(a)(1)&(2)).
areas have included:
- Failure to
credit funds received into the reserve fund, including lock-box
expenses paid from reserve fund assets.
- ED Form 1130
did not include all credits to the reserve fund.
- Use of funds
for other programs (e.g., SSIG and other State programs).
allocation of indirect costs to FFEL program.
422(c), 422(g), 428(c),and 428(e) of the HEA (20 USC 1072(a), (c),
and (d) and 20 USC 1078(c) and (e)), 34 CFR sections 682.410(a)(1)-(2),
January 13, 1995 Dear Guaranty Agency Director Letter)
Objective - Determine whether amounts required to be credited
to the reserve fund were so credited and that reserve funds were
only used for authorized purposes.
a. Review revenue
records to assure that amounts required to be credited to the reserve
fund were so credited. Review revenues and receipts that were not
credited to the reserve fund to assure that they were not inappropriately
omitted from the reserve fund.
b. Test expenditures
to ascertain if they were made for allowable purposes.
the general journal for unusual entries that impact reserve funds
or cost transfers between guaranty agency programs. Analyze entries
reflecting write-off or transfer of assets and entries where costs
were originally charged to a non-FFEL program or activity.
Requirement - A guaranty agency may invest the assets of
the reserve fund only in low-risk securities and shall exercise
the level of care in that investment required of a fiduciary charged
with the duty of investing the money of others (34 CFR section 682.410(a)(5)).
Objective - Determine whether the agency exercised appropriate
care in the investment of reserve fund assets.
a. Obtain and
review the minutes of the guaranty agency's board of directors meetings;
management reports from internal and external sources; and prior
studies and audit reports for indications of investment authorization
b. Review investment
activity during the period to ascertain if:
- The investments
are low-risk. (Note: "Investments" in State loan or scholarship
programs and loans to agency officers, other guaranty agency activities
or subsidiaries, or vendors are not considered investments. They
are inappropriate uses of reserves.)
- Reserve fund
assets have been used in intra-party transactions of the entity
where the entity includes a guaranty agency and non-guaranty agency
operations (i.e., a secondary market participant, a third party
Requirement - The guaranty agency must charge a defaulted
borrower an amount equal to reasonable costs incurred by the agency
in collecting a loan on which the agency has paid a default. The
amount charged the borrower should equal the lesser of the amount
that would be charged under the formula in 34 CFR section 30.60
or, the amount that would be charged if the loan was held by ED.
Costs may include, but are not limited to, attorney's fees, collection
agency charges, and court costs (34 CFR section 682.410(b)(2)).
Objective - To determine whether the agency charged appropriate
collection costs to borrowers of loans on which the agency has paid
a default or bankruptcy claim.
Test a sample
of defaulted loan accounts to determine whether the agency charged
for reasonable costs of collection. Determine whether the method
used to calculate the amount was appropriate.
Requirement - The guaranty agency shall take measures to
ensure enforcement of all Federal, State and guaranty requirements
and at a minimum, conduct biennial on-site program reviews of such
lenders and schools that meet criteria specified in 34 CFR section
682.410(c)(1). The agency is required to use statistically valid
techniques to calculate liabilities owed the Secretary that the
review indicates may exist, demand prompt payment from the responsible
party and refer to the Secretary any case in which the payment of
funds is not made within 60 days. A guaranty agency is also required
to adopt procedures for identifying fraudulent loan applications
and undertaking or arranging for the prompt and thorough investigation
of criminal or other programmatic misconduct by its program participants.
It is responsible also for promptly reporting all of the allegations
and indications having a substantial basis in fact and the scope,
progress and results of the Agency's investigations (34 CFR section
Objective - Determine whether the agency is carrying out
program reviews and related enforcement activity in accordance with
the above requirements.
a. Review the
guaranty agency's procedures for selecting lenders and schools to
review to ascertain if they meet the regulatory criteria.
b. Review program
review guidance to ascertain if that it is up-to-date and includes,
when problems are found, a statistically valid method for determining
liabilities due the Secretary.
c. Review program
review reports to ascertain if amounts due the Secretary were identified
and, if so, whether appropriate demand for payment and follow-up
inquiry and review, determine whether the agency adopted procedures
for identifying fraudulent loan applications and for reporting all
allegations of misconduct having a substantial basis to ED. Review
agency records on the follow-up of misconduct to determine whether
ED was notified when appropriate.