Senate Budget Committee Chairman Mike Enzi (R-WY) last week requested Education Secretary Betsy DeVos conduct an audit of all student loan-related data that is maintained by the Department of Education (ED), citing inaccurate data about the projected cost of income-driven repayment plans and student loan repayment rates included in the College Scorecard.
“It’s important to realize that if the Education Department were a bank, it would be among the largest in the nation, based on its $1.3 trillion student loan portfolio,” Enzi wrote in the letter, which is dated February 23. “If Congress is to continue to entrust the $100 billion annual federal student lending operation to the agency, it must show that it can maintain accurate records of loan transactions, costs and performance—as any financial institution must.”
However, he noted, there are inaccuracies regarding some student loan-related data maintained by ED. For example, a fall 2016 report from the Government Accountability Office (GAO) found that the Obama administration “consistently underestimated” the projected cost of income-driven repayment, largely by underestimating the number of students likely to enroll, Enzi wrote. The report found that income-driven repayment is now projected to cost tens of billions more than initial estimates and is expected to result in $108 billion in loan principal forgiveness.
Another inaccuracy is related to student loan repayment rates included in ED’s College Scorecard. According to Enzi, the Obama administration in its final days issued a notice acknowledging that the Scorecard included flawed data that inflated student loan repayment rates, making it seem like students were paying off their balances faster than they actually were. The corrected data show that the average institution had less than half its former students managing to pay down their loan principal balance by even a dollar three years after leaving the institution. The data on the Scorecard indicated that two-thirds of such borrowers had successfully reduced their balance.
In his letter, Enzi recommends that DeVos “conduct a comprehensive audit of all student loan-related data maintained by the Department – whether used for budgetary, regulatory, public information or other purposes – and take steps to ensure the integrity of the data going forward, starting with the implementation of recommendations made by the GAO in the aforementioned report.”
Publication Date: 3/1/2017