GAO: Student Loan Forgiveness Lacked Fraud Protection

A recent report by the Government Accountability Office (GAO) highlighted inadequacies in the fraud protection measures of the original student loan forgiveness plan proposed by the Biden administration. Released earlier this week, the report indicated that the initial design of the student loan relief program, which was later overturned by the Supreme Court in July, did not adequately safeguard against the possibility of ineligible applicants using false information to claim debt relief.

The GAO emphasized the importance of incorporating robust fraud risk management in any subsequent programs. This call to action was clearly stated in their report, urging the department to prioritize this aspect.

Responding to the GAO’s critique, Richard Cordray, the chief operating officer of the Federal Student Aid program, expressed disagreement last month. Cordray highlighted that the assessment of the department’s fraud risk management as insufficient was misleading, given the federal court orders that halted all progress on the program. This defense was noted in a USA Today article.

In addition, a Department of Education spokesperson shared with Politico that they had devised a comprehensive strategy to manage fraud risks. This strategy was intended to ensure that relief was granted only to eligible borrowers, while also safeguarding them against fraudulent schemes. The spokesperson also pointed out that a significant majority of the program’s applicants were indeed eligible for the relief they sought.