House GOP presses attack on plan for student loan debt

WASHINGTON (CN) — As House Republicans ramp up their efforts to sink the Biden administration’s student loan forgiveness plan, lawmakers are also taking aim at a separate policy that they argue could allow ineligible borrowers to take advantage of a federal loan repayment program.

During the Covid-19 pandemic, individuals with federal student loans were not required to make their usual monthly payments to the Department of Education — including those with loans under the government’s Income-Driven Repayment plan, a scheme that allows borrowers with financial limitations to make more affordable payments.

The Education Department usually requires borrowers applying for its income-based payment plan to submit tax information, which the agency uses to calculate monthly payments. During the loans pause, however, the department is allowing new applicants to self-report their income without supporting documents.

The self-certification option will end around six months after the Education Department resumes collecting loan payments, the agency has said.

Despite that, GOP lawmakers say that allowing borrowers to take on lower monthly payments without verifying need could shift the burden of outstanding loans unfairly onto taxpayers.

A group of House Republicans led by Jim Comer, chair of the lower chamber’s oversight committee, told Education Secretary Miguel Cardona in a letter Friday that such an accommodation “raises serious concerns that individuals may fraudulently misrepresent their income to reduce loan payments.”

To back up those claims, Comer pointed to witness testimony from oversight hearings on Covid-19 relief programs such as the Small Business Administration’s Paycheck Protection Program, which he said illustrated that assistance schemes relying on self-verification are more susceptible to fraud.

During one such hearing held in February, U.S. Comptroller General Gene Dodaro testified that confirming the eligibility of people receiving federal assistance is a key control to prevent fraud. Dodaro presented a February report from the Government Accountability Office, Congress’ independent watchdog organization, that concluded that federal and state agencies that relied on self-reporting left themselves open to fraud risks.

Comer and his Republican colleagues complained to Secretary Cardona that allowing student loan borrowers applying for an income-based payment plan to sidestep the verification process puts the Education Department at similar risk.

“To put it succinctly, self-certification ‘invites fraud,’” the Kentucky Republican wrote, quoting testimony Dodaro gave at a separate oversight committee hearing in April.

The lawmakers requested a briefing by May 19 explaining the Education Department’s authority to relax the payment plan’s income verification requirement and how the agency plans to prevent fraud while the barriers are lowered.

Comer’s inquiry represents just one front of congressional Republicans’ developing assault this week on the Biden administration’s student loans policy. The GOP-led House Committee on Education and the Workforce voted Wednesday to advance legislation that, if approved by both chambers, would nullify the White House’s push to cancel some student loans for millions of borrowers.

Unveiled in October, the Education Department has said its effort would do away with $20,000 in loans for borrowers who received Pell grants from the federal government and would cancel around $10,000 of debt for those holding other types of federal loans. The administration has justified loan forgiveness as a way of easing the financial burden on Americans who suffered through the Covid-19 pandemic.

Republicans skewered the proposal as pushing the burden of student loans onto taxpayers, while Democrats have defended the perspective that it would provide relief to low-income borrowers and have accused GOP lawmakers — some of whom supported debt cancellation for small businesses — of waffling on the issue.

Although Republicans’ loan forgiveness-slaying bill is unlikely to pass in both houses of Congress, the fate of the White House program still hangs in the balance, as the Supreme Court is expected to rule on the issue over the summer.

Follow @BenjaminSWeiss

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