The Department of Education’s Office of Federal Student Aid (FSA) has made some progress in its Next Gen program since it first launched in 2017, but ongoing scheduling delays pose significant challenges to those modernization efforts, the Government Accountability Office (GAO) said in a new report.

The Next Gen program aims to modernize the systems and processes that students, parents, borrowers, and school partners use to apply for, administer, and/or process Federal student aid.

According to GAO, the current FSA operating environment is difficult because it requires borrowers and schools to use multiple websites and contact phone numbers, and nine different loan service providers. That complexity creates challenges for borrowers who need to gather all the information needed to choose a repayment plan, or when trying to correct problems in an account.

In its response to GAO, FSA explained that the modernization project has made progress on the customer experience front in addition to generating more operational flexibility. The agency also explained that the project has resulted in the launch of a modernized website where borrowers can learn about and apply for student aid in one place. FSA has also launched a centralized data hub, it explained.

However, GAO found that FSA’s Next Gen program has fallen behind schedule in its modernization efforts and does not have a clear plan for when some projects will be fully implemented. In addition, FSA has failed to retire two legacy systems, including the central processing system – classified as one of the systems most in need of modernization by GAO.

GAO also found that FSA reported that it has spent a total of $502 million on the Next Gen program, as of June 2022 – not including all government-related labor costs. But even without those labor costs included, the spending total has already exceeded FSA’s September 2021 life cycle cost estimate of $415 million.

“FSA’s schedule and cost shortcomings reflect its lack of alignment with GAO best practices. Specifically, FSA’s cost estimation guidance does not fully address these practices,” the report says. “Further, the Next Gen program did not substantially or fully meet best practices for any of the key characteristics of a reliable cost or schedule estimate.”

GAO emphasized that until these weaknesses are addressed, FSA cost and schedule estimates will continue to be unreliable. In turn, this will impair the ability of senior leadership to make informed decisions on the program’s future.

GAO made several recommendations to FSA, including that the agency update how it does cost and schedule estimations.

Richard Cordray, chief operating officer at FSA, said in reply to GAO’s report that the evaluation focuses more on best practices for IT management rather than the reality of the legal and contractual environment in which FSA is operating. He explained that while he appreciated the recommendations and evaluation from GAO, FSA “operates under certain constraints and must consider how to optimize in terms of existing contracts, current staffing levels, contractor capabilities and other available resources, including funding levels provided by Congress.”

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Lisbeth Perez
Lisbeth Perez
Lisbeth Perez is a MeriTalk Staff Reporter covering the intersection of government and technology.