The Department of Education (ED) failed to implement key protections against fraud before rolling out President Joe Biden’s student debt relief program, a Thursday Government Accountability Office (GAO) report found.
The Biden administration announced a plan in August 2022 to cancel up to $10,000 in student loan debt for non-Pell Grant recipients and up to $20,000 for Pell Grant recipients using the 2003 HEROES Act, which was killed by the Supreme Court in June. The ED approved nearly 12 million borrower applicants without evaluating the accuracy of their application process, according to the GAO’s report.
ED “did not apply key processes to detect and prevent fraud” and did not adequately assess “the accuracy and outcomes of its application process,” according to the report.
US Education Secretary Miguel Cardona speaks during a back-to-school K-12 Cybersecurity Summit in the East Room of the White House in Washington, DC, on August 8, 2023. (Photo by Brendan Smialowski / AFP)
ED planned to approve more than 2 million borrowers for relief automatically based on self-reported income from financial aid applications and enrollments in loan repayment plans, according to the GAO report. Applicants previously underreported their income on these reports, but ED did not take steps to verify the incomes before approving their relief.
“While the application process relied on a potentially effective system for detecting and preventing fraud, it was also complex and untested. Given the speed at which Education designed and initiated this new process, it was necessary for the department to have key procedures in place to evaluate and ensure that all safeguards were working as intended,” the GAO report reads.
The GAO recommended that Education Secretary Miguel Cardona “incorporate robust evaluations of fraud risk management activities into any future debt relief efforts before approving borrowers for relief” and to “avoid relying solely on self-reported data in any future debt relief efforts.”
It also recommended that the secretary implements “all stages of its fraud risk management plans for any future debt relief efforts before approving borrowers for relief.”
The Department of Justice announced in August that it has charged 3,000 individuals with fraud and recovered nearly $1.4 billion in stolen COVID-19 relief funds. The Small Business Administration may have lost more than $200 billion in COVID-19 relief payments to fraud, the SBA’s Office of the Inspector General announced in June.
ED did not immediately respond to the Daily Caller News Foundation’s request for comment.
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