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GAO-24-107142 1 (2023-11-16)

handle is hein.gao/gaopkj0001 and id is 1 raw text is: U.S. GOVERNMENT ACCOUNTABILITY OFFICE 441 G St. N.W. Washington, DC 20548 November 16, 2023 The Honorable Miguel Cardona Secretary, United States Department of Education Student Loans: Education Should Proactively Manage Fraud Risks in Any Future Debt Relief Efforts Dear Secretary Cardona, In August 2022, the Department of Education announced that, to address the heightened risk of delinquency and default caused by the COVID-19 pandemic, it would provide up to $20,000 of student loan debt relief to borrowers who met certain income thresholds. Borrowers eligible for this relief were to receive up to the full $20,000 in relief if they received a Pell Grant while in college, and up to $10,000 if they did not. In total, the Congressional Budget Office estimated that Education would have relieved around $430 billion of student loan debt for more than 31 million federal student loan borrowers.1 To be eligible, borrowers with qualifying federal loans must have had an annual adjusted gross income in 2020 or 2021 below certain thresholds. In November 2022, as a result of court orders, Education ceased work on the student loan debt relief program.2 In June 2023, the U.S. Supreme Court held that the debt relief program was not authorized under the Higher Education Relief Opportunities for Students Act of 2003 (HEROES Act).3 As a result, Education was not able to implement the program. The Biden administration subsequently announced plans to use the department's authority under the Higher Education Act of 1965, as amended, (HEA) to pursue an alternative path to debt relief for borrowers. Little was known about the policies and procedures Education had in place to manage fraud risk in the original debt relief program when it ceased work on the program.4 In addition, Education 'Congressional Budget Office, Costs of Suspending Student Loan Payments and Canceling Debt, (Washington, D.C.: Sept. 26, 2022). The Congressional Budget Office assumed that 90 percent of the estimated 35 million federal student loan borrowers who met income eligibility thresholds would have applied for and received debt relief. 20n November 10, 2022, a district court in Texas issued a ruling vacating the debt relief program. Brown v. U.S. Dep't of Educ., 640 F. Supp. 3d 644 (N.D. Tex. 2022). On November 14, 2022, in a separate lawsuit, the 8th Circuit Court of Appeals issued an emergency injunction pending appeal, temporarily suspending the program. See Nebraska v. Biden, 52 F.4th 1044 (8th Cir. 2022). As a result of these court orders, Education ceased all work on the debt relief program, including fraud mitigation efforts. These cases were ultimately appealed to the Supreme Court. 3Biden v. Nebraska, 143 S. Ct. 2355 (2023). When Education announced the debt relief program, it stated it was relying on authority provided to the Secretary of Education under the HEROES Act. See 87 Fed. Reg. 61,512 (Oct. 12, 2022). In the other case before the U.S. Supreme Court, the Court held that the parties challenging the debt relief program in that case lacked standing, and the Court did not address the merits of the parties' arguments challenging the debt relief program. Dep't of Educ. v. Brown, 143 S. Ct. 2343 (2023). 4Fraud and fraud risk are distinct concepts. Fraud-obtaining something of value through willful misrepresentation-is a determination to be made through the judicial or other adjudicative system, and that determination is beyond management's professional responsibility. Fraud risk exists when individuals have an opportunity to engage in GAO-24-107142 Student Loans Page 1

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