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Report File
Date Issued
Submitting OIG
Department of Education OIG
Other Participating OIGs
Department of Education OIG
Agencies Reviewed/Investigated
Department of Education
Components
Federal Student Aid
Report Number
A03I0006
Report Description

We found that SLMA’s billing for its NLMA subsidiary for SAP under the 9.5 percent floor, complied with the TTPA and HERA. However, SLMA’s billing for NLMA did not comply with other requirements for the 9.5 percent floor calculation. Specifically, SLMA continued to bill loans under the 9.5 percent floor after the eligible tax-exempt bonds, from which the loans derived their eligibility for the 9.5 percent floor, had matured and been retired, and after the loans were refinanced with funds derived from ineligible sources. We estimate that this noncompliance resulted in special allowance overpayments of about $22.3 million.

Report Type
Audit
Location

Reston, VA
United States

Number of Recommendations
3
Questioned Costs
$22,378,905
Funds for Better Use
$0
External Entity
Sallie Mae, Inc

Open Recommendations

This report has 3 open recommendations.
Recommendation Number Significant Recommendation Recommended Questioned Costs Recommended Funds for Better Use Additional Details
1.1 Yes $12,340,492 $0

We recommend that the Chief Operating Officer for Federal Student Aid instruct SLMA to adjust its special allowance billings for loans associated with Bond 93F that became ineligible for the 9.5 percent floor calculation, as described in the finding, and return alloverpayments to the Department (for which we estimate to be about $12.3 million).

1.2 Yes $10,038,413 $0

We recommend that the Chief Operating Officer for Federal Student Aid instruct SLMA to identify the loans associated with Bonds 93B, 93G, and 93H that became ineligible for the 9.5 percent floor calculation, as described in the finding, and adjust its specialallowance billings for the affected loans in the quarters ended June 30, 2002, through June 30, 2005, and return all overpayments to the Department (for which we estimate to be about $10 million).

1.3 Yes $0 $0

We recommend that the Chief Operating Officer for Federal Student Aid instruct SLMA to disclose any other instances, at any of its subsidiaries (e.g., NLMA, Southwest Student Services Corporation, Student Loan Funding Resources, Student Loan FinanceAssociation), of loans billed under the 9.5 percent floor calculation after the eligible taxexempt bond issue matured and after the loans were refinanced with funds derived from an ineligible funding source and, if necessary, adjust its special allowance billings for all affected loans and return all overpayments to the Department.

Department of Education OIG

United States