Top Republicans question Education Department over $39B in loan forgiveness

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Dive Brief:

  • Republican leaders of the House and Senate education committees are questioning what legal authority the Biden administration had to cancel more than $39 billion in student loans earlier this year. 
  • In July, the U.S. Department of Education announced it would wipe away that loan debt from more than 804,000 borrowers with income-driven repayment plans. Under those plans, loans are forgiven after a certain number of qualifying payments — but the department said that it had not tracked those properly, so it would erase the debts.
  • Rep. Virginia Foxx, of North Carolina, and Sen. Bill Cassidy, of Louisiana, wrote to Education Secretary Miguel Cardona last week asking what law the Education Department relied on to justify the discharge and how much it will cost. The lawmakers had more than a dozen questions, including how much loan debt the department intended to erase as it “fixes” income-driven plans.  

Dive Insight:

The Biden administration has made college affordability and repairing the beleaguered financial aid system part of its policy platform.

President Joe Biden’s most significant proposal, a plan to forgive up to $20,000 in debt for borrowers earning $125,000 or less a year, was struck down in the U.S. Supreme Court this summer. However, the administration has pursued other initiatives, including regulations to rework income-driven repayment, or IDR, plans.

In April 2022, the Education Department announced it would adjust account balances of some borrowers who were in long-term forbearance and qualified to have their loans canceled under IDR or the Public Service Loan Forgiveness program, which wipes away student debt of qualifying borrowers who work in government or nonprofits. 

That led to the department’s July announcement that it had forgiven the $39 billion in loan debt. Though conservative groups sued over the cancellation, in August a federal judge dismissed the case and the Education Department began discharging loans.

Foxx and Barr wrote to Cardona that they want questions answered by Sept. 31. Foxx chairs the House Education and the Workforce Committee and Barr is the ranking member of the Senate Committee on Health, Education, Labor and Pensions. 

They pointed out that a 2022 report from the U.S. Government Accountability Office, a nonpartisan watchdog, found that 3,000 borrowers enrolled in IDR plans had 7,700 loans worth $49 million. 

Along with those, the GAO report identified 62,600 loans that had been in repayment loan enough to be forgiven, but that the borrowers hadn’t made qualifying payments. 

“The numbers identified in the GAO report could not account for the $39 billion in loan discharges for 804,000 individuals the Department touted in July,” the lawmakers wrote.


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