GAO Says Education’s Next Gen Modernization Program Needs Improvement

Education’s FSA delivered approximately $112B to more than 10 million students and their families in 2021 making it the largest student financial aid provider in the U.S. In that same year, the office also processed over 17.6 million Free Application for Federal Student Aid (FAFSA®) forms spending $1.3B to process and administer federal student aid.  

FSA’s environment for administering and processing student aid is complex and complicated, requiring schools, borrowers, students, and parents to navigate multiple websites and telephone numbers. To reduce this complexity, and simplify the process and the operating environment, in 2017 the department embarked on a modernization initiative dubbed the Next Gen program. In 2019, GAO reported that one of the systems used during the student aid lifecycle and slated for modernization under Next Gen, was one of the 10 most critical federal legacy systems in need of modernization.

GAO was tasked with evaluating Education’s progress with the Next Gen program, specifically progam status, alignment of its cost estimates with GAO best practices, and the extent that the program is using IT best practices for scope, system development quality, and stakeholder management.

GAO found that as of August 2022, Next Gen’s project scope had changed from 13 projects to nine projects. Five of the nine projects are considered complete, while the remaining four have experienced schedule delays. Three of the four remaining projects do not have definitive completion dates, affecting FSA’s ability to retire two legacy systems.  

FSA’s five completed projects include a data strategy plan, a systems architecture document, a pilot effort on payments, the deployment of a data management platform, and the deployment of a loan data system. FSA deployed various capabilities to its users for three of the four remaining projects but has many more key milestones remaining. The final project, Unified Servicing and Data Solution, showed little progress due to problems associated with modernizing the loan servicing environment. FSA recently initiated its third attempt at its modernization, after two prior attempts failed.

As of June 2022, FSA had spent $502M on the Next Gen program, exceeding original cost estimates of $415M.  However, these costs do not include government-related labor costs because FSA has not tracked these costs. GAO concluded that FSA’s practices do not align with GAO's best practices for cost or schedule estimation, hampering senior leadership's decision-making ability.   

GAO also found that Next Gen’s school partnership project did not fully implement IT best practices associated with project scope, system development quality, and stakeholder management. FSA partially implemented 11 selected best practices, according to GAO. GAO’s report states, “Until the project fully implements all selected best practices, its efforts are at risk of additional delays, cost increases, and system capabilities that do not meet schools’ needs.”

GAO made 14 recommendations to Education to address cost, scheduling and project management weaknesses:

1. The Next Gen program should track and monitor all of its costs, including government labor costs.
2. FSA’s cost estimation guidance should be updated for its acquisition programs to incorporate the best practices called for in GAO Cost Estimating and Assessment Guide.
3. FSA should update the cost estimate for the Next Gen program to ensure it accounts for all costs and incorporates the best practices called for in GAO Cost Estimating and Assessment Guide.
4. FSA should revise the schedule estimate for the Next Gen FSA program to incorporate the best practices called for in GAO Schedule Assessment Guide.
5. FSA should ensure that the PPO project defines metrics for tracking the baseline requirements and the rationale for using the metrics.
6. FSA should ensure that the Partner Participation and Oversight (PPO) project documents how detailed requirements meet the business need for the project.
7. FSA should ensure that the PPO project captures work performance data and information to identify scope variances and their causes.
8. FSA should ensure that the PPO project identifies success criteria and measurable project objectives.
9. FSA should ensure that the PPO project updates the quality management section of its project management plan, and other related quality management documentation, to account for actual project results.
10. FSA should ensure that the PPO project develops executable quality activities that incorporate FSA’s quality policies into the project.
11. FSA should ensure that the PPO project determines that contractor deliverables meet the terms of the contract prior to acceptance.
12. FSA should ensure that the PPO project develops and maintains a stakeholder register that includes identification information or specifics around the level of engagement for each stakeholder.
13. FSA should ensure that the PPO project defines specific strategies for engaging with stakeholders and updates its stakeholder engagement plan to reflect new or changed management strategies required to effectively engage stakeholders.
14. FSA should ensure that the PPO project monitors work performance information that reflects the actual level of stakeholder support and engagement relative to the desired level during all phases of the project lifecycle.