This report examines the effectiveness of recent federal government efforts through amendments to the Higher Education Act (1993) to reduce student loan defaults. Key measures to curb defaults had been to make schools with high student loan default rates ineligible for federal student loan programs. However, many institutions have challenged Department of Education ineligibility decisions arguing that such decisions were based on inaccurate data. Recent amendments have attempted to address these concerns by changing Department processes. In evaluating the effectiveness of these changes a study evaluated Department information on schools filing administrative appeals and court documents. The study found that, as of September 30, 1994, 250 schools had administrative appeals pending with the Department challenging the accuracy of their default rates. In the appeals the main issues under contention were that the Department had used erroneous data in the default rate calculation or that the Department had failed to follow the law by including defaulted loans that had not been properly serviced by lenders in the default rate calculations. Overall the study found that 1993 amendments have not eliminated abuses in the student loan program. Possible ways to address this concern include: (1) holding schools liable for the costs associated with defaults on loans that their students receive during the appeal process; and (2) making schools post a performance bond as a condition of filing an appeal. Appendixes contain scope and methodology and Federal Family Education Loan Program eligibility status of schools with default rates over the statutory thresholds (fiscal years 1991-94). (JB)