Colleges and universities are finding that improvements in the guaranteed student loan process are making it more attractive than direct lending. In its third year, the direct lending program's total loan volume remains at 33%, well below the 50% goal set in originating legislation. Even some of its strongest supporters fear the program will have…

Public officials and student aid experts agree that the federal program delivery system is outdated, inefficient, and vulnerable to fraud, but they disagree on how bad the situation is and whether the Education Department has the structure necessary to fix it. A 1995 project to integrate all federal grant and loan programs into one system has not…