Application Accepted

Of the 13 million loan and grant applications it received this year, the Education Department’s Federal Student Aid Office got 82 percent of them—nearly 10.7 million—online.In raw numbers, that’s a huge leap from the 1.7 million online applications the office received when it started accepting them electronically in 1996. But more important, it reflects a significant shift in the way FSA does business, and its evolution into a more customer-oriented, performance-based organization.The project was born of necessity. Over the last five years, FSA has seen a 37 percent increase in the number of students applying for federal loans or grants. Meanwhile, the office’s annual operating budget has decreased by four percent since 2001, to $603 million.FSA officials—under a 1998 mandate from Congress—directed student loan and grant program managers to focus more on their customers, develop program metrics and monitor results.Now, FSA, which administers more than $60 billion in student loan programs to 13 million applicants annually, is seen as a good example of what OMB hopes to accomplish with its e-government initiatives.“We now are organized around the customer instead of programs,” said Terri Shaw, FSA chief operating officer. “We transformed the aid process from paper to electronic and implemented e-business solutions for schools and our financial partners.”The online applications and the Student Aid Web site illustrate how the office has become a performance-based organization.“FSA is a model for making information available to the public online,” said Office of Management and Budget spokesman Chad Kolton. “FSA has restructured itself to become more results-oriented, by focusing on external linkages rather than programs and projects. This approach is eliminating redundancies and greatly improving relations with the schools community.”Shaw said the office expects the number of applications to rise to 20 million over the next five years, while FSA’s budget remains flat or even decreases.“Every piece of communication we can we are trying to move to some form of electronic process, be it electronic applications [or] student aid reports,” Shaw said. “That has a tremendous impact on our printing costs and our processing costs.”As it changes its processes, FSA also is outsourcing them, saving money. The office has awarded a contract to integrate its processing applications to Affiliated Computer Services Inc. of Dallas in November. Shaw estimated that the merging of those apps will save her office $1 billion over the next 10 years. FSA hired Pearson Government Solutions Inc. of Arlington, Va., to combine the applications for its central student eligibility processing system, which has reduced operating costs by $15 million over the last five years.Accenture Ltd. and Pearson are competing for a contract to integrate the systems that users interact with. Shaw said the agency is expected to award a contract in the fall. This too will save millions of dollars, she said. Shaw could not offer more specific cost savings because her office currently is reviewing vendor proposals.So how did FSA become an example of what OMB is pushing other agencies toward?Shaw said the mandate from Congress was a great impetus, but it also took a change in the agency’s culture.“Congress wanted us to be a performance-based organization, to run more like a business,” Shaw said. “I think this office runs more like a business than a government. We are on a march to realize a different vision.”That vision depends on the technology behind it. The office used Web and e-government technologies to put information and applications online, to personalize the college search, admissions and aid processes.With the vast majority of students applying online, Shaw said her office has saved millions of dollars in postage, printing, administrative and data entry costs.The online application has helped students avoid manually filling out paper applications with 100 data elements. This has reduced the time it takes to complete an application, on average, from one or two weeks to 30 or 45 minutes. It also improved accuracy to near 100 percent because of the online editing help the software provides, Shaw said.“The error rate is less than 1 percent compared to 8 percent on the paper form,” she said. Having 82 percent of applicants file online “is a clear indicator that we are hitting the mark. Students will find out if they are eligible for aid in a day, and they can update their information online.”The American Customer Satisfaction Survey Index gave FSA’s Web site a 77 percent satisfaction rating for 2003—highest of all government financial services.Previously, contractor and FSA employees scanned the applications and did double data entry to ensure there were no errors, a process that took almost two days, said Jennifer Douglas, general manager for FSA’s Student Aid Web site.The online application system was written in Java, runs on Hewlett-Packard Unix servers and is made available by WebSphere Network Deployment 5.01 application server and a Web server from IBM Corp.“We’ve simplified systems, integrated applications and reduced processing time from days to hours,” Shaw said.FSA also checks data against information from other agencies, such as the Social Security Administration and the Homeland Security and Justice departments, sending data via File Transfer Protocol each night. The other agencies respond in 24 hours by confirming that the data is correct or incorrect.Shaw hopes to use Web services to check the data in real time to further improve the office’s response time.Students also can use a personal identification number and password to apply online, sign a promissory note, make payments and manage their accounts, said Katie Crowley, deputy general manager for FSA’s application, school eligibility and delivery services.“All-electronic enablement allows us to do a much better job of ensuring the integrity of the program and guard against fraud, waste and abuse,” Shaw said.