In fiscal year 2004, lenders made about $65 billion in loans through the Federal Family Education Loan Program (FFELP) to assist students in paying for postsecondary education. The Higher Education Act (HEA), which authorizes FFELP, broadly defined eligible lenders, including schools. The Department of Education's (Education) Office of Federal Student Aid (FSA) is responsible for ensuring that lenders comply with FFELP laws and regulations. Recently, schools have become increasingly interested in becoming lenders, and this has raised concerns about whether it is appropriate for schools to become lenders given that they both determine students' eligibility for loans and in some cases set the price of attendance. In light of these concerns, the following issues were examined: (1) the extent to which schools have participated as FFELP lenders and their characteristics; (2) how schools have structured lending operations and benefits for borrowers and schools; and (3) statutory and regulatory safeguards designed to protect taxpayers' and borrowers' interests. To research objectives data from the Department of Education was analyzed, and officials with school lenders were interviewed. Relevant laws and regulations were also reviewed. GAO recommends that FSA take steps to ensure that all school lenders are consistently complying with applicable statutory and regulatory requirements.