The loan collection practices and procedures of guaranty agencies and ways to reduce default costs were assessed by the U.S. General Accounting Office at the request of Congress. Questionnaires were completed by 58 guaranty agencies and visits were made to eight agencies. Before revised regulations were issued by the U.S. Department of Education in November 1986, each guaranty agency was allowed to establish its own collection practices, and the agencies' collection practices varied. The revised regulations required all agencies to pursue five specific actions to collect defaulted loans. These steps, pertaining to the type and frequency of collection attempts, should help to reduce federal default costs. Legislative actions taken in 1986 include a requirement for defaulters to pay reasonable collection costs and reporting to credit bureaus about the borrowers' loans and repayment patterns. Additional suggestions concerning loan collection are presented. Appendices include: examples of major legislative changes to the Guaranteed Student Loan Program and comments from the Department of Education, the Internal Revenue Service, and the National Council of Higher Education Loan Programs, Inc. (SW)