A r c h i v e d I n f o r m a t i o n

   FOR RELEASE             Contact:  Stephanie Babyak (202) 401-2311    October 10, 1995                     Jane Glickman (202) 401-1307

Government Cuts Red Tape; Colleges to Experiment in Federal Student Aid Delivery

As part of the Clinton Administration's effort to reinvent the federal government, the U.S. Education Department is cutting more red tape, freeing a group of colleges to tailor the way they deliver financial aid to their students.

U.S. Secretary of Education Richard W. Riley today announced approval of 54 five-year projects at more than 100 higher education institutions for the first phase of an experiment excusing them from certain statutory and regulatory requirements and permitting them to use innovative strategies designed to better meet their students' needs.

"This is an exciting example of government reinvention that benefits colleges and students," Riley said. "We look forward to working with the higher education community to find truly innovative strategies for relieving administrative burdens while maintaining program accountability."

The schools were selected from among those with a proven track record of delivering federal student financial assistance without risk to taxpayer dollars.

Schools are to report annually to the department on project results. Performance measures, including default rates of borrowers at schools participating in the projects, will be monitored.

The projects will allow schools greater flexibility in:

informing students about student loan repayment obligations (exemptions from entrance and exit loan counseling regulations);
making loan funds available to students (exemptions from mandatory multiple disbursement for single-term loans and mandatory 30-day delayed disbursement for first-time borrowers);
calculating student cost of attendance (exemptions from mandatory inclusion of loan fees in cost of attendance and mandatory loan proration for graduating students); and
helping students arrange to pay for their education and related costs (exemption to allow crediting of Title IV aid to institutional charges without individual written authorizations from students and exemption to allow crediting of Title IV aid to prior term charges).

Riley said the department is continuing to review proposals and expects to approve additional projects.

He said today's announcement is part of a comprehensive effort to reduce administrative burdens and costs on the nation's colleges and universities.

In Fall 1994, the department announced a series of measures to simplify management and reduce paperwork for colleges and students, such as replacing paper record-keeping with electronic processing for more than 4 million Federal Pell Grant recipients.

Last month, the department published a series of proposals to eliminate even more forms, signatures, and administrative steps for schools and families.