Tens of thousands of federal student loan borrowers may be getting their monthly payments lowered by lying about income and family size, according to report released by federal watchdog agency.
Tens of thousands of federal student loan borrowers may be getting their monthly payments lowered by lying about their income and family size, yet the U.S. Education Department is doing little to catch them, according to a report released Thursday by a federal watchdog agency.
Education Secretary Betsy DeVos said her agency will conduct comprehensive review of the repayment plans and will refer cases of fraud to the Justice Department for prosecution. She placed blame on previous administrations, saying the problems are proof that"many of the policy ideas previously pursued were poorly implemented."
They concluded that the department"does not have procedures to verify borrower reports of zero income, nor, for the most part, procedures to verify borrower reports of family size." Borrowers applying for the repayment plans can check a box indicating they have no income, and the department generally takes them at their word with no further documentation needed, the investigation found.
Investigators acknowledged that their review doesn't necessarily prove fraud, but they emphasized that borrowers"may have a financial incentive to commit fraud to reduce their monthly payment amount."
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