President Biden is Ignoring Fraud Risks in Student Loan Forgiveness Program
Loose requirements and limited information borrowers are required to provide is a recipe for massive fraud
Instead of addressing higher education costs in a responsible way which helps address and permanently solve the problem, last month President Biden issued his unconstitutional Executive Order forgiving student loan debt. The EO forgiving up to $20,000 just kicks the can down the road. Hopefully, courts will step in and stop this egregious executive overreach through one of many lawsuits challenging the program’s constitutionality. But if courts do not, and so far there has been no indication they will accept the invitation to do so, it appears the Department of Education (ED) program will supplant Paycheck Protection Program (PPP) as the most fraud-riddled federal program in recent history.
Government anti-fraud watchdogs, particularly the ED Office of the Inspector General (OIG), need to act now. Waiting for some post hoc fraud mitigation reviews will be ineffective in stopping fraud. It should be common sense but in government, it bears stating – the ED OIG and Government Accountability Office need to be doing proactive oversight of ED as it operates the program and is actively decisioning applicants, including sting operations to help find where program operations are failing to identify fraudulent applications, of which there will be hundreds of thousands. Somebody needs to be looking out for the taxpayer’s interests because by all appearances, President Biden’s ED is most assuredly not looking out for them.
Last week, the White House bragged on Twitter about how little documentation and information applicants will need to get the free $20 grand. No need for a Federal Student Aid ID to verify the existence of debt. No need to answer the question, “do you have student debt?" No need to verify income to ensure the program’s means testing components are met. No need to use recent tax returns. No verification on any information, instead opting for self-attestations. And that’s just the tip of the iceberg.
President Biden’s team appears to have looked at PPP, a program designed in such a way to cause law enforcement to describe it as “an invitation” to fraudsters and thought, ‘we can beat that.’ The Biden Administration has not learned, or actively ignored, any cognizable lesson from the PPP debacle. One could ostensibly forgive Congress for designing PPP in such a way as to leave taxpayer funds susceptible to fraud given the short time frame and economic uncertainty during COVID’s onset. But conversely, other than upcoming midterm elections, the Biden team has no time crunch. Frankly, given how relaxed the verification requirements are one is stumped as to how those who designed the program do not expect massive fraud rates. Or maybe they do expect the fraud, and just do not care. Though to be fair, considering the Biden Administration’s half-baked and ad-hoc changes to the program designed to moot out lawsuits, the Occam’s Razor explanation for the appallingly poor program design is not a deliberate attempt to induce fraud, but rather the Biden Administration just forgot about fraud mitigation concerns. Either way, it’s unacceptable.
Moreover, the Department of Justice (DOJ) is already overwhelmed by the extremely large amount of fraud throughout the COVID programs there is to prosecute. In August, Congress passed extensions of the statute of limitations for PPP and COVID Economic Injury Disaster Loans fraud because DOJ and the Small Business Administration’s OIG lacked the resources and time to track down all the fraud before the statute of limitations ran out. Now, add a mountain of new fraud on top of existing investigations. By the time law enforcement gets around to tracking down all the fraud this program will have, the money will be long gone and prosecutors will be time barred from charging fraudsters.
Contrary to all past experiences, proactive fraud prevention in government programs is possible. What’s more, it is necessary. Without fraud controls, bad actors will see experience a multi-billion dollar windfall, again, and taxpayers will be left holding the bag. Clawing back the money once it gets distributed will be impossible. It must be stopped before ED sends it out or taxpayers can kiss it goodbye.