According to a review by the Government Accountability Office, billions of dollars were wiped clean from consumers ‘ data as a result of a change in federal regulations regarding student loan forgiveness under the Obama and Biden administrations.
“ When all you ’ve got is a hammer, everything looks like a nail, ” Rep. Virginia Foxx (R-NC), president of the House Committee on Education and the Workforce, told the Washington Examiner. Democrats have used illegitimate interpretations of the loan protection laws and other student loan schemes as equipment to give the far-left what it wants for years. Today, we’ve got the statistics to confirm it. ”
Foxx decried the report’s results, accusing the two Democratic leaders of engaging in “dramatic federal overreach ” and “complete disrespect” toward citizens.
Republicans have frequently criticized attempts to forgive student loans, arguing that doing so would lead to higher taxes and harsh treatment of those who have already repaid their student loans, which would not gain those programs. Some claim that the country’s debt and deficit may be worsened by the cancellation of loans.
Since its founding, the Education Department has received 888,430 software from 762,180 consumers, according to the report. Of those, only 1 % were denied while 47 % were approved through individual adjudication. Almost 50 % of all pending cases were closed as of April 30.
If their institutions engage in some wrongdoing, such as misrepresenting knowledge about graduate employment prospects, they may be eligible for federal loan pleasure under the Student Loan Reform Act. The borrower defense regulations were first put into effect in 1995 after the law was passed in 1993, and they remained in place for 20 years.
Those rules required that borrowers provide evidence of “any act or omission of the a school where the student attended that would constitute a cause of action under applicable state law. ” During the first 20 years of the program, only 59 people applied to have their student loans forgiven, according to the report.
After Corinthian Colleges closed, the largest for-profit college shutdown in the U.S., the Education Department saw a rise in applicants in 2015. S. history that kicked about 16,000 students out of school.
According to the GAO report, the Obama administration decided to implement new regulations in order to” clarify and streamline the borrower defense process.” The department then stopped processing loan applications because of litigation or the Trump administration‘s efforts to review the process in 2017.
According to the report, “the act of taking out a Direct Loan does not qualify, ” new federal regulations were established in 2019 that required the borrower to demonstrate financial harm.
The Education Department issuing final regulations in November 2022 that established a new federal standard that would apply to all federal applications pending on or submitted after July 1, 2023. This litigation continued throughout the course of 2022.
Due to ongoing litigation, those regulations were supposed to go into effect on July 1, 2023, but they have n’t been implemented.
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Although the agency did share its findings with the department, the GAO report did not make any recommendations for the Education Department. However, the department responded to the “comparatively low ” number of denied claims, noting the department has “built a thorough, fair, and consistent process to review claims. ”
In a letter to GAO that was included in the report, Dennis Johnson, director of strategy and performance for federal student aid, wrote that the number of approvals reflects work that was done beginning in 2015 ( almost a decade ago ), while the number of denials largely reflects decisions made based on reviews made after the Department established its current processes. We will continue to review claims, approve those that are meritorious, and reject those that are not. ”