Sunday 14 May 2023

Biden’s Education Secretary Under Fire Over Potential For Fraud In ‘Student Loan Bailout Scheme’

 House Republicans are questioning Education Secretary Miguel Cardona over the potential for waste and fraud in aspects of the Education Department’s student loan repayment plan. 

House Oversight Committee Chairman Rep. James Comer (R-KY) and House Education and Workforce Committee Chairwoman Virginia Foxx (R-NC) sent a letter to Cardona on Friday asking how the department planned to deter potential fraud since it was pursuing an income-based repayment plan without verification measures in place for income.

“In light of the Oversight Committee’s observations about self-certification in multiple COVID-19 pandemic relief programs, we are concerned about the extent to which the Department is leaving taxpayers vulnerable to waste, fraud, and abuse,” they wrote in a letter first obtained by the Washington Examiner. 

While student loan payments have not yet resumed, the current plan in place stipulates lower monthly payments for those with lower incomes. The Republicans are concerned because of they say the income is self-verified, potentially exposing the program to abuse. 

“The Biden Administration’s student loan bailout scheme leaves taxpayers holding the bag,” Comer told the Examiner. “Biden’s Department of Education has now kicked the door wide open to waste, fraud, and abuse by eliminating verification measures designed to prevent fraud in student loan repayments. We need Secretary Cardona to provide answers about why the Department is taking actions that make hardworking taxpayers liable when student loan borrowers misrepresent their income.”

The letter referenced the large amount of fraud that occurred with the Paycheck Protection Program during the COVID pandemic because of similar self-certification measures. Foxx said that the department was showing that it was not ready to restart the payment process. 

“When borrowers initially enrolled in an [income-driven repayment] plan, they provided tax return information,” she said. “It’s ridiculous for the Department to not enforce the program requirements. This decision calls into question the department’s motives and its overall preparedness to handle the return to repayment for millions of borrowers.”

The letter comes as the department is getting ready to resume student loan payments, something that has been paused for three years. 


“We’re preparing to restart repayment because the emergency period is over, and we’re preparing our borrowers to restart,” Cardona told senators during a hearing on Thursday. 

Some payments could be impacted by how the Supreme Court decides to rule on Biden’s student debt cancellation plan, which would unilaterally cancel up to $20,000 in unpaid loans for 40 million borrowers.

“We recognize that during the pandemic, it was very difficult for borrowers,” Cardona said. “We are committed to making sure that once a decision is made, that we’re going to resume payments 60 days after, but no later than June 30. We’re going to begin that process.”

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