Biden’s $430B student loan giveaway had no fraud protection: feds

President Biden’s plan to unilaterally forgive $430 billion in student loan debt, which was blocked earlier this year by the Supreme Court, failed to safeguard against potential fraud, a new government report released Thursday shows.

Biden’s Department of Education sought to approve between $10,000 and $20,000 in student loan relief for up to 31 million borrowers as part of the plan — but did not properly vet whether those students’ incomes necessitated the debt forgiveness, according to the Government Accountability Office.

“Fraud poses a significant threat to the integrity of federal programs and erodes public trust in government,” the watchdog noted.

“We have previously reported that the public health crisis, economic instability, and increased flow of federal funds associated with the COVID-19 pandemic have expanded opportunities for fraud.”

More than 26 million students had applied or been automatically deemed eligible for debt relief by November 2022, when lower court orders halted the program.

The report shows the Education Department approved more than 12 million applicants’ requests without having ever “collected or reviewed any income documentation” from borrowers.

Instead, the agency relied on applicants’ self-reported income and data on post-enrollment earnings and aggregate income to estimate eligibility.

Under the program, federal Pell Grant recipients were eligible for up to $20,000 in debt relief.

Recipients without Pell Grants were eligible for up to $10,000 in student loan forgiveness if their adjusted gross income in 2020 or 2021 was under $125,000 for individuals and under $250,000 for married couples who file jointly.

Another 2 million borrowers were automatically qualified for debt cancellation based merely on income they reported in past financial aid applications and enrollments in loan repayment plans.

“Education and GAO have both previously identified problems with people underreporting their income on these forms, but the department did not take any steps to verify incomes for these borrowers before automatically approving them for relief,” a highlight from the report states.

A final measure would have reviewed tax filings from select borrowers, only 790,000 of whom had been flagged — but not had their income reviewed — by the time the Supreme Court overturned the program.

The GAO asked Biden’s Education Department “to incorporate evaluations of fraud risk management before providing relief, implement all stages of its fraud risk management, and implement controls to avoid relying on self-reported data,” with which agency officials “partially concurred.”

“It is unconscionable that the Biden administration was willing to shift hundreds of billions of dollars of student debt onto taxpayers with no accountability,” Senate Health, Education, Labor and Pensions Committee ranking member Bill Cassidy (R-La.) said in a statement.

“Americans who did not go to college or paid off their loans should not be stuck paying the bill for those who went to college to make more money after graduation.”

In a subsequent Thursday letter, Cassidy and Sen. Rand Paul (R-Ky.) called out Education Secretary Miguel Cardona for having concealed some information from the public version of the report.

“During its review of the public release version of this report, [the Education Department] applied the [Controlled Unclassified Information] designation to entire sentences, and, in one case, an entire footnote,” the GOP senators wrote. 

“GAO made changes to its report to address [the department]’s concerns. Our staff reviewed an unamended version of GAO’s report and were unable to determine a reasonable justification for ED’s CUI classifications,” they added.

“This raises serious questions about the review process that ED follows when examining GAO reports. It also raises concerns that ED may be using the CUI designation to sanitize embarrassing or otherwise unfavorable information in GAO reports and shield it from public release.”

Biden and Cardona announced the student loan cancellation program in August 2022, arguing a law passed during the Iraq War to provide loan relief to military service members should be able accommodate students affected by the COVID-19 pandemic.

Solicitor General Elizabeth Prelogar argued before the Supreme Court in January that the debt cancellation would “fall comfortably” under the 2003 Higher Education Relief Opportunities for Students (HEROES) Act and that the president had “clear authorization” to do so.

But on the final day of its last term, the high court’s six conservative justices ruled that the law was enacted only to help veterans of the Iraq and Afghanistan wars and that Biden could not “rewrite that statute from the ground up” without the approval of Congress.

The following month, Biden and Cardona rolled out a separate income-driven repayment plan for student loans that would cost $475 billion over the next decade, according to the Penn Wharton Budget Model.

Neither the White House nor the Education Department immediately responded to requests for comment.

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