Education and the Workforce Committee Chairwoman Virginia Foxx (R-NC) today released a critical report on one of the Biden-Harris administration’s largest student loan forgiveness schemes: borrower defense.
“There’s no surprise here: the Biden-Harris administration has refused to admit that its student loan schemes are illegal, and instead has tried to stretch every possible law to deliver on its outrageous campaign promise,”said Chairwoman Foxx. “Thankfully, the courts have seen through these shams, and in eighteen days, the jig will finally be up.”
The report examines how the U.S. Department of Education distorted a process intended to provide recourse to students who attended schools that are found to have engaged in fraudulent misrepresentation. Instead, the Department has weaponized the process to provide illegal en masse debt “forgiveness.”
The Department approved en masse borrower defense “group” claims in order to illegally approve nearly $18 billion in taxpayer funds for borrower defense discharges.
A whistleblower came forward to the Committee and provided extensive evidence that statutes of limitation governing refunds were routinely ignored and Federal Claims Collection Standards were not followed, again, with the purpose of approving en masse debt cancellation.
The Department once again distorted the meaning and Congressional intent behind settlement and compromise authority granted by the Higher Education Act.
BACKGROUND:
In 2015, the Obama-Biden administration issued new regulations on borrower defense and encouraged tens of thousands of borrowers—whether they were harmed or not—to apply to have their loans forgiven. For the first 20 years of the rule prior to these changes, there were 59 claims. The Obama-Biden administration’s actions encouraged more and more applications from borrowers, without any need to demonstrate financial harm, and promoted illegal group loan discharges which are not directly authorized or even mentioned by the Higher Education Act. The result was the number of applications jumping to more than 300,000. The Biden-Harris administration is continuing this Obama precedent to achieve the Democrat objective of transferring student loans to taxpayers.
In October 2023, Chairwoman Foxx subpoenaed Secretary Miguel Cardona for documents related to borrower defense.
In May 2022, Chairwoman Foxx called on the U.S. Department of Justice to intervene in ED’s attempts to abandon due process in its rewrite of the borrower defense rules.
In September 2018, Chairwoman Foxx wrote to then-Secretary Betsy DeVos expressing concern that regulations authored by the Obama-Biden administration “drastically exceeded the scope of current law to the detriment of students, institutions, and taxpayers.”
In November 2016, Foxx, then Chairwoman of the subcommittee responsible for postsecondary education, requested the report from the GAO, wanting to “ensure taxpayers are protected against abuse and fraudulent claims through the borrower defense provisions as currently exist.”
