4 Republican lawmakers ask how much student debt costs taxpayers and slam Biden's 'complete incompetence' in disclosing that
- Four Republican lawmakers called out the Education Department's lack of transparency on federal student-loans.
- They requested the department provide documents showing the cost to taxpayers.
Four Republican lawmakers want the Education Department to tell them how much the federal student-loan portfolio is truly costing taxpayers.
On Wednesday, Rep. Virginia Foxx and Sen. Richard Burr — top Republicans on the House and Senate education committees — wrote a letter to Education Secretary Miguel Cardona requesting he be "forthcoming and timely" in producing records pertaining to the cost of the federal student-loan portfolio.
The way these loans would cost American taxpayers is in the case that a borrower defaults, not only would the government miss out on those payments — the borrowers would face wage garnishment and be stripped of federal benefits for falling behind.
This request comes as the $1.5 trillion federal student-debt load is continuing to grow, and although federal loan payments have been on pause for nearly two years, many borrowers are still in default on their debt and will not be able to afford loan payments when the pause expires on May 1. The lawmakers want to know how the Education Department is assessing those issues — and how it will protect Americans from fronting big bills in the process.
'Confounding' and a 'failure' in government oversight
Along with GOP Rep. James Comer and Sen. Mike Braun, the lawmakers told Cardona his department demonstrated a "failure" to comply with oversight requests given it has yet to release reports on the economic value of the direct loan portfolio and the credit risks associated with it. They added that the department claimed to not have seen some of the reports, which they called "confounding."
"It is inexcusable to treat the taxpayer investment in this program with such little respect," the lawmakers wrote, adding that the department's actions are "either blatant obfuscation of the facts or complete incompetence on the part of your leadership team."
—House Ed & Labor Republicans (@EdLaborGOP) January 12, 2022
An Education Department spokesperson told the Wall Street Journal, it has been working over the last several months "to address members' questions about the federal student loan portfolio and to clarify the methodology used to assess its size and value."
One of the documents the lawmakers requested was a report under former Education Secretary Betsy DeVos that cast a dire outlook on the student-loan portfolio. As first reported by the Wall Street Journal, a JPMorgan executive found that for over three decades, the government had been making the student-loan system look profitable when in reality more and more borrowers were going into default.
Given the high default rate, the JPMorgan study concluded taxpayers would be on the hook for $435 billion — significantly lower than the $68 billion in long-term losses the department estimated in June. The Journal reported the Biden administration did not take into account JPMorgan's data, citing different methodology used to calculate the losses.
Pausing student loan payments costs the government in lost revenue
Along with the cost to taxpayers, the nearly two year pause on student-loan payments has also cost the government more than $100 billion since the start of the pandemic, according to department data.
This isn't the first time Republican lawmakers have expressed concern with the Education Department's lack of transparency. In September, Foxx and Burr wrote in a letter to Cardona that they were "deeply concerned" about resuming student-loan payments because there were not sufficient details on what the transition back into repayment would look like.
"The lack of clarity and guidance about the process surrounding returning borrowers to repayment is as troubling as the process is uncertain," they wrote.
The lawmakers are giving the Education Department one week to provide a schedule for disclosure of the requested documents.
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