Critical Issues Brought to the Attention
                   of ED Officials in Other OIG
                          Work Products
               (April 1, 1995   September 30, 1995)



           Student Financial Assistance (sfa) Programs    
       "Prisoners Continue to Receive Federal Pell Grants"
                 SFA Action Memorandum No. 95-04
                           May 24, 1995

Though the Violent Crime Control and Law Enforcement Act of 1994 (Crime Bill) made prisoners in State and Federal institutions ineligible for Pell grants, it did not address the eligibility
of prisoners in city or county jails.  Our review found that one school, which already had obtained a waiver of the 25 percent incarcerated student limitation imposed by the Higher Education
Amendments of 1992, discontinued its training program at a State penal institution and began training about the same number of prisoners at five local jails.

We recommended that the Department:  1) inform Congress that the Crime Bill does not address the eligibility of Federal Pell Grant funds to prisoners in city or county jails; and  2) re-evaluate
its procedures for granting waivers of the 25 percent incarcerated student limitation.


                                          


         "PLUS Loans to Some Parents May Exceed $200,000!
              Will Those Parents Be Able to Repay?"
                 SFA Action Memorandum No. 95-08
                        September 28, 1995

The Higher Education Amendments of 1992 (P.L. 102-325) removed dollar-specific academic year and aggregate limits for PLUS loans disbursed on or after July 1, 1993.  We found that
because of these changes, some parents borrowed from $40,000 to $100,000 during FY 1994; with two or three children in college, a parent could easily accumulate a debt of more than
$200,000.  Indeed, during FY 1994   the first full year of relaxed aggregate loan limits   parents borrowed $870 million in PLUS loans in amounts exceeding the old $4,000 loan limit.

An additional complication is that many parent borrowers are more than 50 years of age, and the allowable 30-year repayment period would necessitate that they live to the age of 80 or beyond
to liquidate the loan.  Regardless of age, many parents simply do not have the resources to make payments on such large debts.

We advised the Assistant Secretary for Postsecondary Education that the absence of reasonable loan limits and repayment periods puts the Department and the taxpayer at risk for significant
default and death claims.




                        Inspection Report
                  Gateway Electronics Institute
                   Omaha and Lincoln, Nebraska
                    N0040948     July 24, 1995

Our report disclosed that Gateway Electronics Institute (GEI) is neither financially responsible nor administratively capable of continued participation in the Title IV student financial assistance
programs.

In addition to not meeting the Secretary's standards of financial responsibility, GEI has a history of failing to make refunds and making refunds late.  The inspection also disclosed that GEI made
second and subsequent disbursements of Title IV funds to ineligible students.  We also found that the system used by GEI to track student attendance and satisfactory progress contained unreliable
data; thus, there is no assurance that refund determinations are being made timely and are correct.  Our review also disclosed other deficiencies demonstrating GEI's lack of administrative
capability, including misrepresentations regarding job placement and graduate employment, and a lack of checks and balances in the administration of the Title IV programs.