By Owen Daugherty, NASFAA Staff Reporter
Two leading Republican lawmakers are calling on the Government Accountability Office (GAO) to look into findings from a report on the federal student loan program’s finances that reportedly found decades of federal miscalculations in student loan program profits.
The letter from Reps. Virginia Foxx (R-N.C.), ranking member of the Education and Labor Committee, and Greg Murphy (R-N.C.), ranking member of the Subcommittee on Higher Education and Workforce Investment, comes on the heels of an article in The Wall Street Journal citing the report that found over the course of three decades, Congress, various administrations, and federal watchdogs had “systematically made the student loan program look profitable when in fact defaults were becoming more likely.” The report was requested in 2018 by former Education Secretary Betsy DeVos.
The letter, addressed to GAO Comptroller General Gene Dodaro, alleges the Department of Education (ED) “is hiding information from the public that could provide a more accurate depiction of the budgetary impact of the federal student loan program.”
It’s the second letter from Foxx in as many weeks regarding the report. The first was sent to Education Secretary Miguel Cardona urging him to release the full report by May 5, arguing that it was being hidden from lawmakers and the public. The Biden administration put an end to the private-sector analysis of the federal student loan program and does not plan to release the report, according to The Wall Street Journal. Several staffers at the Office of Management and Budget criticized both the data and methodology used in the analysis.
As the article lays out, the letter notes that both Congress and the executive branch have amended and added repayment plans and loan forgiveness programs that have changed projections over the course of several decades.
“These actions make previous budget projections less accurate,” the letter states. “Any discrepancies between policy ideals and real-world practice are magnified if the initial underlying assumptions do not reflect the updated policies.”
Pointing to the national three-year cohort default rate of nearly 10%, the possibility of ED extending the current federal forbearance period on student loan payments, and calls to issue widespread debt forgiveness to borrowers, Foxx and Murphy argue the “stakes are simply too great for Congress to look the other way and allow these accounting games to continue.”
The lawmakers are asking the head of the GAO to identify and address a handful of questions to better understand the report’s findings and the financial state of the federal student loan program.
Publication Date: 5/7/2021
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