The loan collection efforts of the Department of Education are discussed in hearings held as part of fact finding prior to reauthorization of the Higher Education Act. Attention is directed to the collection record of the Department, the rationale for shifting collections from federal to private collectors, and the reasons why two of the remaining three federal collection offices are to be closed. The activity of the Department's Office of Inspector General in the area of student loan defaults and collections is summarized. The amount outstanding in the National Direct Student Loan program is over a billion dollars. The Guaranteed Student Loan program has about a $1,300,000 default; about $2 billion totally in default payments have been made to guarantee agencies by the government. The Department is shifting loan collection functions that exist in three regional offices--San Francisco, Chicago, and Atlanta, into the San Francisco office. Under the Debt Collection Act, the Department is allowed to report defaulted student borrowers to credit bureaus. Under provisions of the Department Collection Act, the Department has used computer matching to identify federal employees who are in default in student loans. (SW)