Enzi: Obama mis­led on size of stu­dent loan debts

The Washington Times Daily - - POLITICS - BY DAVE BOYER

Tax­pay­ers will pay at least $74 bil­lion for a fed­eral pro­gram to re­duce stu­dent loan re­pay­ments, more than twice the amount ex­pected, a govern­ment watch­dog said Wed­nes­day.

The Govern­ment Ac­count­abil­ity Of­fice said the cost to the govern­ment for cov­er­ing loans made be­tween 2009 and 2016 was more than dou­ble the amount es­ti­mated by the Depart­ment of Ed­u­ca­tion. The cost could still rise if more bor­row­ers en­roll.

The in­ves­ti­ga­tors found that the ad­min­is­tra­tion didn’t ac­count for in­fla­tion in bor­row­ers’ in­come for its ini­tial es­ti­mates of the pro­gram costs. More than 5 mil­lion bor­row­ers are en­rolled in the in­come-based re­pay­ment loan pro­gram, about 25 per­cent of all stu­dents who re­ceive direct loans from the fed­eral govern­ment.

Se­nate Bud­get Chair­man Michael B. Enzi, Wy­oming Repub­li­can, blasted the ad­min­is­tra­tion for mis­lead­ing tax­pay­ers and avoid­ing con­gres­sional over­sight with the loan pro­gram “at a time when our na­tion is fac­ing mam­moth na­tional debt.”

“This ad­min­is­tra­tion has been ma­nip­u­lat­ing the terms of the stu­dent loan pro­gram with­out the con­sent of Congress, while shirk­ing its statu­tory duty to care­fully as­sess the cost im­pact of those changes,” Mr. Enzi said. “It will be cru­cial to con­sider up­dates to the Fed­eral Credit Re­form Act be­cause Congress is not re­ceiv­ing cred­i­ble, trans­par­ent cost data un­der the ex­ist­ing statute, as this re­port sug­gests.”

The stu­dent loan pro­gram fixes monthly re­pay­ments at a per­cent­age of the bor­rower’s in­come. Af­ter 25 years of re­pay­ments, the re­main­der of a loan is for­given.

The GAO said that, of $352 bil­lion in loans made from 1995 to 2017 that are ei­ther in in­come-based re­pay­ment plans or el­i­gi­ble for them, only $215 bil­lion will likely be re­paid by bor­row­ers.

“Of the rest, $108 bil­lion will be for­given by the govern­ment and $29 bil­lion will be dis­charged be­cause of death or dis­abil­ity,” the GAO said.

White House press sec­re­tary Josh Earnest said he hadn’t seen the re­port, but said Pres­i­dent Obama “has placed a pri­or­ity on mak­ing sure that grad­u­at­ing stu­dents are treated fairly by the Depart­ment of Ed­u­ca­tion and by lenders when it comes to their stu­dent loans.”

He said the ad­min­is­tra­tion has “pi­o­neered” the no­tion of in­come-based re­pay­ment, which al­lows stu­dents or re­cent grad­u­ates to cap their monthly loan re­pay­ments at 10 per­cent of their in­come.

“This is a way that we can en­sure that grad­u­ates are ful­fill­ing their ba­sic re­spon­si­bil­ity to re­pay the govern­ment for the money that they bor­rowed, but we want to make sure that when stu­dents grad­u­ate, that they’re not sad­dled with so much debt that they’re es­sen­tially pe­nal­ized fi­nan­cially for pur­su­ing col­lege ed­u­ca­tion op­por­tu­ni­ties,” he said.

The Ed­u­ca­tion Depart­ment told the GAO that it’s “pos­si­ble” for the govern­ment to re­ceive in­come from the loans due to in­ter­est pay­ments, even if out­stand­ing loan bal­ances are even­tu­ally for­given. The GAO replied that for­given bal­ances are still a “fore­gone cash flow to the govern­ment.”

The re­port crit­i­cized the Ed­u­ca­tion Depart­ment for not pro­vid­ing “suf­fi­cient in­for­ma­tion” about how it reached its own cost pro­jec­tions for its in­come-based re­pay­ment pro­gram.

The pro­gram is the largest fed­eral direct loan pro­gram, with $912 bil­lion in out­stand­ing loans as of last June.

Ed­u­ca­tion of­fi­cials told GAO that the higher-than-ex­pected loan vol­ume is likely due to more gen­er­ous terms made avail­able since 2012, in­creased pro­mo­tion of the loan pro­gram and in­creased col­lege at­ten­dance af­ter the re­ces­sion of 2008-09, co­in­cid­ing with the end of a guar­an­teed loan pro­gram through pri­vate lenders.

The GAO blamed ad­min­is­tra­tion poli­cies such as mak­ing more gen­er­ous ben­e­fits retroac­tively in the “Pay As You Earn” re­pay­ment plan in fis­cal year 2013, which ex­tended the bet­ter ben­e­fits to bor­row­ers dat­ing back as far as 2008. The in­ves­ti­ga­tion also found that “of­fi­cials re­spon­si­ble for bud­get es­ti­mates may not have ad­e­quately an­tic­i­pated par­tic­i­pa­tion growth.”

AS­SO­CI­ATED PRESS

Se­nate Bud­get Chair Michael B. Enzi scolded the Obama ad­min­is­tra­tion for mis­lead­ing tax­pay­ers on the pre­cise level of na­tional un­paid stu­dent debt.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.