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Biden Education Dept asked to pause student loan plan until safeguards in place to prevent fraud, abuse

The Defense of Freedom Institute (DFI) wrote a letter to U.S. Department of Education Inspector General Sandra Bruce Wednesday asking for an immediate “pause” to student loan cancellation applications until necessary precautions are implemented to prevent waste, fraud and abuse.

“DFI writes because we are deeply concerned that the Biden administration’s recently announced student loan debt cancellation policy lacks basic safeguards against waste, fraud, and abuse,” the letter reads.

“Some of these safeguards could be easily implemented—such as directing borrowers to give the Department permission to confirm income through Internal Revenue Service (IRS) records during the application process,” it added.

The DFI criticized the Education Department’s current measure allowing for “self-certifications” to verify eligibility for the cancellation program, noting the potential for waste to come from the allotted $430 billion cost.

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“This is simply unacceptable, particularly where, as here, no statutory requirement or other deadline exists that requires the Department to act with such haste,” the organization added in the letter.

“Accordingly, we urge your prompt action to request that the Department immediately pause its processing of student loan cancellation applications until the agency has established a system of rigorous safeguards to protect the interests of the taxpayer.”

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In a press release issued Wednesday, the nonprofit slammed the existing measures by calling out the Education Department’s own acknowledgment of the application process’ shortcomings, writing, “by ED’s own admission, its system for approving loan cancellation applications relies largely on fraud-prone self-certification of income eligibility.”

“We’re talking about canceling more than $430 billion in debt owed to the taxpayers based on little more than pinky promises from borrowers that they qualify for loan forgiveness,” DFI president and co-founder Bob Eitel said, according to the release.

“This is the sort of malfeasance that happens when an administration acts without authorization from Congress and makes it up as it stumbles along. This behavior simply cannot stand, and that’s why we are calling on the IG to urge the Department to immediately stop processing student loan cancellation applications until rigorous safeguards are put in place to protect billions of dollars in taxpayer money.”

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DFI’s letter to Bruce critiqued President Biden’s student loan forgiveness plan for its “unorthodox” roll-out, noting the administration has opted to detail the effort outside the “usual legal processes” and rely instead on press releases, blog posts and more.

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DFI also relayed its critique of the “self-certification” process to COVID-19 relief aid, pointing to red flags highlighted by several Inspectors General at the time the aid was announced.

“The Inspectors General of several federal agencies, including the Department of Labor and the Small Business Administration, raised alarms about the risks of self-certification within weeks of the first wave of COVID disbursements.

“More recently, several investigations have confirmed that self-certification invites fraud and abuse from a small number of people,” the letter read.

The organization pinpointed other instances of fraudulent self-reporting, including loan borrowers who failed to accurately report their family size or income for Income Driven Repayment (IDR) plans.

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