Comer, Foxx, Sessions: Department of Education’s Student Loan Self-Certification Opens Door to Fraud

WASHINGTON—House Committee on Oversight and Accountability Chairman James Comer (R-Ky.), House Committee on Education and the Workforce Chairwoman Virginia Foxx (R-N.C.), and Subcommittee on Government Operations and the Federal Workforce Chairman Pete Sessions (R-Texas) today are calling on Department of Education Secretary Miguel Cardona to provide answers about the Department’s decision to waive income verification requirements for student loan borrowers who enroll in income-driven repayment plans. The lawmakers are concerned that individuals may fraudulently misrepresent their income to reduce their loan payments and ultimately have their student loans transferred to taxpayers.

“We write to express our grave concerns about the Department’s unannounced decision to relax the income verification requirements for federal student loan borrowers who enroll in income-driven repayment (IDR) plans. According to the website of the Office of Federal Student Aid, the Department has determined that, because of the COVID-19 pandemic and the subsequent pause in student loan repayments, a student loan borrower enrolling in IDR will not be required to provide the necessary tax documentation to verify the income on which a borrower’s monthly payments are calculated,” wrote the lawmakers.

For a student loan borrower with excessive repayment burdens, IDR offers lower monthly payments based on a share of a borrower’s discretionary income rather than the amount borrowed. Normally, borrowers must provide their tax return information to enroll in an IDR plan and must recertify that information each year. However, the Biden Administration is allowing student loan borrowers to self-certify their income. The Oversight Committee has held two hearings about COVID-19 relief programs, including programs that relied on self-certification, and has heard testimony that self-certification contributed to improper payments and fraud.

“In light of the Oversight Committee’s observations about self-certification in multiple COVID-19 pandemic relief programs, we are concerned about the extent to which the Department is leaving taxpayers vulnerable to waste, fraud, and abuse,” continued the lawmakers. Indeed, the Comptroller General himself has said “We’ve seen . . . [in the past] . . . [IDR] plans . . . [that] didn’t verify incomes, and a lot of people who reported zero income really didn’t have zero income.”

The lawmakers’ letter concludes by noting “Given the correlation between self-certification and fraud, we request a staff-level briefing no later than May 19, 2023, about the following points: (1) the Department’s specific legal authority to waive income verification requirements; (2) a detailed explanation of when and why the decision to relax income verification was made; and (3) the Department’s internal controls and procedures used to prevent fraud in student loan repayments.”

Read the letter to Secretary Cardona here.