The Veterans Administration (VA) loan program was reviewed by the General Accounting Office (GAO) to determine if it was meeting its primary objectives as stated in the legislative history. The program is mandated to provide an additional source of financial aid to students attending high-tuition institutions who would otherwise be financially unable to attend. The program was not meeting congressional intent in that about 72 percent of the loans made were to veterans attending schools charging low tuition or none at all. VA also has no assurance that the loans were based on demonstrated financial need. According to VA data, as of December 31, 1977, 44 percent of all matured loans were in default. The rate may have been as high as 55 percent if GAO findings in nine VA regions were representative of the entire country. VA's central office was not aware of the extent of this problem because it was not collecting all of the data necessary to compute the default rate properly. Recommendations are offered to the Administrator of Veterans Affairs. (Author/SW)