The U.S. Department of Education on Friday said it’s canceling nearly $5 billion in federal student loan debt owed by some 73,600 borrowers, a majority of whom are public servants.
The announcement marks the the latest effort by the Biden administration to target specific groups of federal student loan borrowers by tweaking and expanding rules under existing relief programs, after the U.S. Supreme Court shot down its broader and more expensive debt cancellation plan.
Of those 73,600 beneficiaries announced on Friday, 43,900 are receiving $3.2 billion in student loan discharge through Public Service Loan Forgiveness, a program that erases outstanding student loan balances for those working in public service jobs like teachers, nurses, or police officers once they have made 10 years of qualifying payments.
In 2021, the Biden administration overhauled the Loan Forgiveness program, allowing hundreds of thousands of borrowers to get additional credit toward the final discharge.
The other $1.7 billion is going to 29,700 people currently enrolled in income-driven repayment plans. Under such a plan, the amount of monthly payment is adjusted based on the borrower’s income and family size, and the borrower may be eligible to have any remaining debt wiped out after a certain amount of time in repayment, typically after 20 years for those with undergraduate student loans and 25 years for those with graduate school loans.
According to the Education Department, those 29,700 borrowers have been in repayment for at least 20 years and have earned their eventual debt relief, but have not received it because loan servicers failed to “accurately account” for their payments.
Including Friday’s relief, the Biden administration has so far approved the cancellation of over $136 billion in student loan debt for more than 3.7 million people.
Independent Auditor Dings Education Department, Again
Friday’s announcement comes as the House’s education committee is demanding answers after an independent auditor decided not to offer an opinion on the federal agency’s Fiscal Year 2024 finances because of “material weaknesses” in the way the Biden administration calculated the cost of providing student loans.Rep. Virginia Foxx (R-N.C.), who chairs the House Education and Workforce Committee, said in a letter sent Thursday to U.S. Secretary of Education Miguel Cardona that he will need to explain the failed audit at a hearing next month.
“Simply put, the Department has failed an audit two years in a row, been derelict in its duties, and continues to make up estimates it cannot defend to its auditor,” Ms. Foxx wrote. “We are deeply disturbed by this administration’s bungling, general ineptness, and deliberate wasteful spending of taxpayer dollars. The American people deserve better.”
KPMG, the independent auditor hired by the department’s inspector general, said in a report last November that it didn’t have enough evidence to provide an audit opinion “because of unresolved errors KPMG identified in the underlying data” the department used to calculate the price tag of the federal student loan program.
Last year, the same auditor refused to render an opinion on the department’s annual financial statement for not being able to provide “adequate evidential matter” that could have backed its estimate of how much President Joe Biden’s student loan cancellation plan would cost.
According to KPMG, the methods the department used to estimate how many people would participate in the debt cancellation plan “were not properly designed at an appropriate level of precision.”
“As a result, the documentation over the subsidy cost estimates in the financial statements was not supportive to evidence the estimate calculations,” they wrote in last year’s report.
