The U.S. Department of Education's Federal Student Aid office has been removed from the list of government programs at high risk for fraud, waste, abuse and mismanagement, according to a new report from the Government Accountability Office, U.S. Secretary of Education Margaret Spellings announced today.

"This recognition is a significant accomplishment for the Department and reflects the dedication and hard work of talented public servants," Secretary Spellings said. "The Department's diligence in addressing these real financial integrity and management issues has resulted in sustained, meaningful improvements in our student aid programs--improvements which have a direct and positive impact on the students and taxpayers we serve."

The GAO's report on high risk programs is issued every two years and identifies government programs that need urgent attention and transformation in order to ensure that the government functions in the most economical, efficient and effective manner possible.

"We have achieved this valuable result as part of this administration's focus on management and operating effectiveness," Under Secretary of Education Ted McPherson said. "It's the quality of the leadership and management team in place at Federal Student Aid and related areas of the Department that made this breakthrough possible."

"This considerable achievement is the result of the commitment of Federal Student Aid's 1,100 employees," said Terri Shaw, chief operating officer at Federal Student Aid. "I am very proud to be part of the FSA team and I am confident we will continue to improve the quality of our programs, our organization and our value to the millions of students and families we serve."

Federal Student Aid has taken several steps over the past few years to improve its management, including:

• Establishing improved financial management processes at every level, which has resulted in clean audit opinions for Federal Student Aid and the Department of Education's financial statements for fiscal years 2002, 2003 and 2004;
• Reducing the cohort default rate to 5.2 percent in 2002 (the latest year available)--from an all-time high of 22 percent in 1990, when the student aid programs were originally placed on the government's list of high-risk programs; and
• Improving the business processes for delivering student aid services, which has resulted in reduced administrative costs and increased productivity gains even as the workload has dramatically increased.

Last year, Federal Student Aid distributed more than $69 billion in grants, loans and work-study jobs to more than 10 million students and families attending over 6,200 postsecondary institutions and managed an outstanding loan portfolio of $357 billion.

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