The increasing costs, paid by the Department of Education through 47 loan guaranty agencies, for defaulted loans made through the Guaranteed Student Loan Program prompted the General Accounting Office (GAO) to evaluate the policies and procedures used by the Department and the guaranty agencies. The purposes were to determine whether: (1) the guaranty agencies established and enforced collection and claim filing standards for lenders that adequately protect the federal interest; and (2) the guaranty agencies promptly process and pay lender claims. The principal findings were that: most agencies' collection standards have not been approved by the Department; the standards of most of the agencies were inadequate; compliance with standards has not been enforced; federal interest costs varied widely; and the Department's revised regulations need to be enforced. GAO's recommendation is that the Secretary of Education develop and implement a process that will provide such enforcement. (KM)