"The Education Department’s lax vetting of income and household information is leaving popular student loan repayment programs susceptible to fraud and errors, the Government Accountability Office said in a report Thursday," The Washington Post reports. 

"Nearly half of federal students loans are being repaid through programs that cap monthly payments at a given percentage of earnings, known as income-driven repayment plans. They extend repayment periods from the standard 10 years to as many as 25 years, with the promise of forgiving the balance at the end of that period. To enroll and remain in the programs, borrowers must submit information about their income and family size to calculate monthly payments.

GAO researchers found about 95,100 income-driven plans were held by borrowers who reported no earnings but who actually made enough to pay something toward their debt. About one-third of that group were estimated to have earned at least $45,000 a year; some had six-figure salaries. Those borrowers owed nearly $4 billion in outstanding student debt.

...

Advocacy groups have called for streamlining the plans and for greater cooperation between the Education Department and the IRS. But some fear the GAO report could be used as an excuse to tighten the screws, although the problems identified by the government watchdog were not conclusively determined to be fraud.

'Any efforts to safeguard these programs must be carefully balanced against creating overly burdensome bureaucratic barriers that could prevent qualified borrowers from receiving the benefits to which they are entitled,' said Justin Draeger, president of the National Association of Student Financial Aid Administrators."

NASFAA's "Notable Headlines" section highlights media coverage of financial aid to help members stay up to date with the latest news. Articles included under the notable headlines section are not written by NASFAA, but rather by external sources. Inclusion in Today's News does not imply endorsement of the material or guarantee the accuracy of information presented.

Publication Date: 7/26/2019