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Congressional Watchdog Cites Fraud Risks in Biden Administration’s Student Debt Relief Program

The Biden administration came under scrutiny for rushing to implement a student debt relief program without sufficient anti-fraud measures, according to a report released by the Government Accountability Office (GAO). The Education Department failed to establish robust procedures to prevent ineligible borrowers, particularly high-income individuals, from receiving relief under the $430 billion program.

The GAO found that the department did not adequately verify self-reported income information, leading to potential fraud. The Supreme Court has already invalidated the program, but the findings could influence the design of the administration’s next attempt at debt cancellation.

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The GAO recommended that the Education Department incorporate more extensive anti-fraud procedures and avoid relying solely on self-reported data in future debt relief efforts. The Biden administration has not yet specified whether the new debt relief program, to be pursued under the Higher Education Act, will require applications or self-certification. However, the administration has expressed interest in automating the process using existing data.

The GAO report provided ammunition to Republican critics of Biden’s debt relief efforts, who accused the administration of disregarding the cost to taxpayers. Rep. Virginia Foxx criticized the department’s lack of oversight and accountability, while Sen. Bill Cassidy questioned the decision to withhold parts of the report from public view.

However, Rich Cordray, head of the Office of Federal Student Aid, stated that the agency disagreed with some findings but agreed with most recommendations moving forward.

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The Education Department defended its efforts to combat fraud, asserting that it had implemented a tailored strategy to ensure that only eligible borrowers received relief. The department’s anti-fraud measures primarily targeted the 2% of borrowers estimated to have incomes too high for relief, while 98% qualified for the program.

The GAO report highlighted the challenges the Biden administration faced in swiftly implementing an extensive debt relief program. The program, which aimed to provide up to $20,000 of debt relief to millions of borrowers, was announced in August 2022 after significant internal debate.

The administration eventually settled on income caps to address concerns about aiding high earners. However, determining eligibility quickly was challenging because the agency lacked income information for most borrowers.

The Education Department created a simple application process based on borrowers’ signed attestations of meeting income requirements. While praised for its simplicity, the process did not adequately address fraud risks.

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The report revealed that out of the approximately 12 million people who submitted applications, the Education Department subjected around 790,000 to additional scrutiny. However, the department approved the remaining borrowers for relief before evaluating the effectiveness of its process for identifying potential fraud.

The GAO also criticized the department for automatically approving borrowers based on income information, failing to verify the accuracy of self-reported data for 2 million borrowers.

In summary, the GAO report raises concerns about the Biden administration’s student debt relief program, highlighting the need for stronger anti-fraud measures and caution in relying on self-reported data. The findings have implications for the design of future debt cancellation initiatives by the Education Department.

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