Report: Billions of taxpayer dollars were at risk of fraud under student loan debt relief program

A new watchdog report is revealing billions of taxpayer dollars could have been at risk of fraud under President Biden’s student loan debt relief program.

The U.S. Supreme Court shot down the program in June. But as the Biden administration explores other ways to provide debt relief, the watchdogs argue officials need to learn from these lessons.

The findings from the U.S. Government Accountability Office (GAO) revealed the Education Department wasn’t always taking the proper steps to prevent fraud or mistakes in the student debt relief program.

“Billions of taxpayer dollars could have been at risk for fraud,” said Melissa Emrey-Arras, a Director of Education issues for GAO.

Emrey-Arras said while the Education Department had some fraud checks in place, they didn’t fully implement those checks.

A major concern outlined in the report is that the Education Department wasn’t always verifying reported income. That matters because eligibility for the program was income-based.

An individual had to earn less than $125,000 a year to qualify to student loan debt relief and married couples had to earn less than $250,000.

“The Department had planned to automatically approve over two million borrowers based solely on self-reported income,” said Emrey-Arras. “You don’t just rely on what people say. You check the information.”

Washington Correspondent Samantha Manning asked the GAO if based on these findings, is it fair to say if the U.S. Supreme Court didn’t strike it down and it did go forward as originally planned, that there would have been a lot of instances of potential fraud or borrowers who were wrongfully given debt relief?

“That is our concern, Samantha,” Emrey-Arras responded. “We are very concerned that the Department did not put in place enough preventive measures.”

In response to the findings, the Education Department argued “the student loan debt relief program inherently had an extremely low risk of fraud.”

“It targeted a population of borrowers well known to the Department; the program would have provided debt relief rather than cash payments; and the share of potentially ineligible applicants was very small,” wrote the Chief Operating Officer for Federal Student Aid. “That said, the Department fully assessed the risks of fraud, identified the risks discussed by GAO, and, as GAO notes, developed and implemented measures to address them.”

The Education Department also noted that borrowers who were flagged for verification would not be granted full relief until they submitted tax documentation that was reviewed by the Department.

The Education Department partially agreed with GAO’s recommended changes, which include implementing robust evaluations of fraud risk.

“The Department is planning a new effort to provide debt relief to borrowers,” said Emrey-Arras. “While we don’t know the specifics of how that will look exactly, the Department is still figuring that out through the rulemaking process. What we do know is the lessons we have learned from the prior program.”

When we asked the White House for a response to the findings, a spokesperson referred us to the Education Department.

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