The U.S. Department of Education is calling for scrutiny of Income-Driven Repayment (IDR) plans days after a Government Accountability Office (GAO) report indicated fraud in the popular repayment program.
The report checked borrowers’ income, family size and found potential error and fraud. More than 76,000 borrowers have had enough to repay their loans but didn’t pay anything, while 35,000 borrowers had approved plans with a typical family size of 9 or more.
“Because income and family size are used to determine IDR monthly payments, fraud or errors in this information can result in the Department of Education (Education) losing thousands of dollars of loan repayments per borrower each year and potentially increasing the ultimate cost of loan forgiveness,” GAO report noted.
The Education Department is further considering action by referring to the cases of potential fraud to the Department of Justice.
While blaming the potential fraud on poor implementation of policies by previous administrations, Secretary of Education Betsy DeVos urged Congress to authorize the department to independently verify income using IRS data.
“For years there have been deliberate efforts to make the maze of student aid more complex for students and less accountable to the American taxpayers who underwrite it. Today’s report is just the latest proof that many of the policy ideas previously pursued were poorly implemented,” DeVos said in a statement.
“Without Congressional action, we are unable to partner with the Internal Revenue Service (IRS) to independently verify this information.”
However, the GAO report has recommended further vetting of data or borrowers who report zero income on IDR plan applications. It also called for the implementation of data analytic practices and follow-up procedures to verify borrowers.
Last year, DeVos warned of “a crisis in higher education” while referring to management, administration, and distribution of Federal Student Aid (FSA). She called for changes in the aid program saying that most of the loans are either “delinquent” or in “default.”