Tag: student loans

Trump admin targets ‘ghost students,’ AI scammers stealing tens of millions in federal college aid

The Department of Education is cracking down on “ghost students,” AI scammers and others whom they say have recently swindled of tens-of-millions of dollars from the federal government – including roughly $8.4 million alone from California community colleges.

Within California’s system of 116 community colleges, 31% of applications last year – or 1.2 million – were found to be likely fraudulent, according to data from the office of the chancellor for the college system.

What makes the system vulnerable is that anyone who applies is admitted and more students not having to attend class as a result of the increase in remote learning since the COVID-19 pandemic. 

The scammers, with the help of stolen identities, bots and artificial intelligence join classes and stay enrolled until they receive their financial aid checks, according to The Los Angeles Times.

“The biggest target for fraud rings tends to be community colleges and lower-cost institutions,” Jason Williams, an official with the Education Department’s Office of Inspector General, said on a recent agency podcast. “This is because their tuition costs are lower than other schools, which increases the student aid award balance for the fraudulent student.”

While prevalent in California, the problem of fake applications is nationwide, with reports of fraud rings in states including Illinois, Louisiana, Maryland, Missouri and Nevada. 

The Education Department reported in May nearly $90 million in disbursements recently to ineligible recipients across the U.S., including thousands of deceased individuals receiving some form of payment. 

In Mississippi, a mother and daughter team recruited anyone in the area willing to participate. They then used these identities to apply for student aid, register for classes and collect the checks when the money was disbursed. They were later put in prison after obtaining $2.5 million. 

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Education Department Finds $90 Million in Improper Student Aid Payments

The Department of Education has uncovered nearly $90 million in federal student aid that was disbursed to people who were not eligible, including thousands of deceased individuals, it said on May 28.

The agency released the findings on May 28 as part of a broader effort to restore oversight tools and reduce fraud in federal student aid programs. Officials said the improper payments occurred over the past three years and were tied in part to lapses in verification systems that had been paused.

“From start to finish—filling out the [Free Application for Federal Student Aid] form to loan repayment—the American taxpayer underwrites federal student aid programs,” Education Secretary Linda McMahon said in a statement. “We are committed to protecting and responsibly investing their hard-earned dollars.”

According to the department, more than $30 million of the improper payments went to recipients who were listed as deceased. A cross-check with the Social Security Death Index flagged the error. Officials said they have strengthened real-time data-sharing with the Social Security Administration to help prevent similar mistakes in the future.

Other cases involved identity fraud and immigration-related ineligibility. In March, the department resumed flagging suspicious Free Application for Federal Student Aid applications using data models designed to catch inconsistencies or signs of identity misuse. A recent review found that nearly $40 million in Direct Loans and $6 million in Pell Grants had been issued to people who did not qualify.

Officials said individuals granted immigration parole status—temporary permission to remain in the country—are not immediately eligible for aid. To better identify these cases, the department said it has received updated data from the Department of Homeland Security.

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Crackdown On Student Loan Defaulters To Begin With Benefit Seizure, Then Wage Garnishment

The U.S. government will begin seizing federal benefits from 195,000 student loan defaulters in June, with wage garnishment notices set to reach 5.3 million borrowers later this summer, the Education Department announced on May 5, marking the formal restart of involuntary collections after a years-long pause

The renewed enforcement effort begins with the Treasury Offset Program, which allows the federal government to intercept tax refunds, Social Security checks, and other federal payments to recover unpaid student debt. Borrowers affected by the program began receiving notices this week, the department said.

“Starting today, approximately 195,000 defaulted student loan borrowers will begin receiving an official 30-day notice from the U.S. Department of Treasury notifying them that their federal benefits will be subjected to the Treasury Offset Program,” the Education Department said in Monday’s announcement.

Following the notice period, administrative wage garnishment will begin later this summer for all 5.3 million borrowers who remain in default. Guaranty agencies have also been authorized to resume involuntary collections on defaulted loans under the Federal Family Education Loan (FFEL) Program, the department added.

The move officially ends a pandemic-era freeze first imposed in March 2020 under President Donald Trump and extended multiple times under the Biden administration. Although payments officially resumed in fall 2023, most collection efforts remained paused—until now.

In an April 21 statement previewing the shift, the department said the decision was necessary to “restore common sense and fairness” and protect taxpayers, citing data that only 38 percent of the 42.7 million federal student loan borrowers were current on their loans, while nearly 10 million were delinquent or in default. The remainder were in forbearance, deferment, or grace periods.

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Biden’s $475B student debt cancellation plan blocked as federal appeals court issues final decision

A federal appeals court delivered a crushing blow Tuesday to a more than $475 billion student debt cancellation program begun by former President Joe Biden, ordering the underlying regulation be blocked in its entirety.

The Eighth US Circuit Court of Appeals had partially blocked the loan forgiveness effort last year — but a three-judge panel at the St. Louis-based court issued a final judgment to a lower court prohibiting any part of the initiative from taking effect.

Judge L. Steven Grasz in a 25-page opinion ruled that Biden’s Education Secretary, Miguel Cardona, had “gone well beyond” his constitutional authority in creating the Saving on a Valuable Education (SAVE) plan.

“Rather than implying by omission or other ambiguities, Congress has spoken clearly when creating a repayment plan with loan forgiveness or otherwise authorizing it — explicitly stating the Secretary should cancel, discharge, repay, or assume the remaining unpaid balance,” Grasz wrote, finding “no comparable language” in the SAVE Plan.

In 2023, the Penn Wharton Budget Model estimated the so-called “repayment plan,” which Grasz said allowed for student debt to be “largely forgiven rather than repaid, would cost taxpayers $475 billion over the next decade.

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Biden Withdraws Plan to Cancel Student Loan Debt For 38 Million Americans, Blames “Operational Challenges”

Joe Biden withdrew plans to cancel student loan debt for 38 million Americans and blamed “operational challenges.”

“In making this decision, we considered the Department’s ability to implement the proposed rules if they were finalized in a form identical or largely similar to what was included in the NPRM. With the time remaining in this administration, the Department is focused on several priorities including court ordered settlements and helping borrowers manage the final elements of the return to repayment following the Fall 2024 end of the 12-month on-ramp period designed to assist borrowers who were unable to make their payments or who needed more time to access information to determine the right repayment plan for their circumstances,” the Department of Education said on Friday.

In a separate announcement on Friday, Joe Biden approved of an additional $4.28 billion in student loan forgiveness for nearly 55,000 public service workers.

President Trump will immediately unwind Joe Biden’s unconstitutional student loan forgiveness program, Politico reported.

Last month a federal judge gave Joe Biden a win a few weeks before the election and said he can move forward with his student loan forgiveness plan.

US District Judge in Georgia, Randall Hall, a George W. Bush appointee allowed a restraining order against the Biden-Harris Regime’s student loan forgiveness scheme to expire.

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King Biden & Queen Harris Overrule Supreme Court On Student Debt Forgiveness

Biden repeatedly acts like he is above the law. So who’s the threat to Democracy?

The Wall Street Journal reports Biden Snubs the Courts Again on Student Loan Forgiveness

‘That didn’t stop me,” President Biden declared after the Supreme Court blocked his $430 billion student loan write-off in 2023. It sure didn’t. After striking out in court with three debt forgiveness schemes, the Administration on Friday unveiled another. Take that, judges.

The Education Department says its proposed rule would authorize forgiveness for some eight million borrowers experiencing “hardship.” Under the rule, the department can discharge debt if it calculates a borrower has an 80% likelihood of defaulting on payments within the subsequent two years based on 17 factors such as income, debt balances and assets.

The rule would effectively let the department forgive debt of any borrower any time it wants. The administration says high child-care costs could qualify as a hardship. How about high auto loan or credit-card payments? Did someone say moral hazard?

In April the department released a plan that cancels accrued interest for 25 million borrowers and forgives debt of those who entered repayment over 20 years ago or who “enrolled in low-financial-value programs”—meaning, forprofit colleges. The plan also promised to waive debt for borrowers with a “hardship.”

A federal court last month blocked that plan, but the department says its new rule “would operate separately and distinctly.” Courts are playing whack-a-mole with the Administration’s debt write-offs that end-run Congress, which never authorized such broad-based debt forgiveness.

Such lawlessness is one reason so many Americans discount the left’s assertions that Donald Trump endangers democracy. Mr. Biden acts like he’s king, and Democrats and media voices cheering him on have no standing to object if Mr. Trump follows the Biden precedent.

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Biden administration to forgive $4.5 billion of public service workers’ student loans

After making what it called “significant fixes” to the Public Service Loan Forgiveness (PSLF) program, the Biden administration on Thursday is announcing the approval of $4.5 billion in student loan forgiveness for 60,000 borrowers who work in public service jobs. 

The PSLF was established by Congress in 2007 under then-President George W. Bush, to allow those working full time in public service jobs for 10 years who had made 10 years of student loan payments to have their loans forgiven. But as of four years ago, only about 7,000 people nationwide had received loan forgiveness under the program, due in part to its complicated rules and a lack of federal oversight. 

“Teachers, first responders, service members, sometimes have student debt and choose to get back to their communities or their country and accept low paying jobs, and student debt is often a real obstacle in that,” James Kvaal, Under Secretary of the Department of Education, told the Capital-Star. “So Congress created the Public Service Loan Forgiveness Program in a bipartisan way, but it was never implemented.” He said some who were eligible for the program were in the wrong repayment plan, or some didn’t file the right paperwork at the right time. 

In 2021, the Department of Education (DOE) overhauled the PSLF program, which made more people eligible for forgiveness sooner. Since that time, 44,150 Pennsylvania public service workers have had more than $3.15 billion of student loans canceled, according to a fact sheet from the DOE, with a total of $175 billion forgiven for more than 4.8 million people nationwide. 

For those who may have applied for PSLF before and been rejected, Kvaal encourages them to reapply. And while some other student loan forgiveness programs the Biden administration has put forth have been blocked in the courts, the PSLF is an established program with bipartisan support, Kvaal said. The DOE has been working on streamlining the application process, he added, so that it’s easier for eligible borrowers to apply and track their status. 

And public service workers don’t have to wait until they’re past the 10-year mark to apply, Kvaal said, if they’re in a job that qualifies them for the program and plan to stay there, they can apply and track their progress on the DOE website until they’ve completed the requirements. 

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Making Over $141K, Minneapolis Mayor Thanks Biden For Student Loan Forgiveness

If you weren’t already infuriated by Joe Biden’s exploitation of the federal student loan program as a means of buying votes and redistributing wealth, this should do the trick. 

On Wednesday, Minneapolis Mayor Melvin Carter — who earns makes takes $140,814 a year before benefits — rushed to Twitter to thank President Biden for erasing his remaining student debt, sharing a screen shot showing his outstanding balance had turned to zero. 

The latest drip in the fiscal Chinese water torture that’s being inflicted on responsible, productive Americans came earlier that day, with Biden announcing he was cancelling another $7.7 billion of debt. With that, the total such debt wiped away by his administration has reached $167 billion.  

After emphasizing that the average beneficiary of Biden’s self-serving abuse of taxpayers has had $35,000 in debt forgiven, White House Press Secretary Karine Jean-Pierre fielded a challenging question from, of all sources, NBC News. Correspondent Peter Alexander asked, “Why don’t those individuals who didn’t receive $35,000 in debt cancellation deserve a $35,000 check from other Americans for what other means they would want to use it?”

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Republicans accuse Biden of having ‘no shame’ as he cancels student debt for 813,000 people in ‘re-election ploy’ that will force taxpayers to saddle billions of dollars extra

The leading Republican opponent of student loan forgiveness on Wednesday slammed President Joe Biden‘s plan to cancel student debt for 813,000 people as a clear effort to buy his way to reelection next year.

Hundreds of thousands of former students will receive emails from the president in the coming days telling them that their debt has been forgiven.

Republican Sen. Bill Cassidy posted the president’s message on X, the platform formerly known as Twitter, including a request for beneficiaries to share the good news. 

‘Couldn’t make it any clearer that Biden’s ploy to force taxpayers who didn’t go to college to saddle hundreds of billions of someone else’s student debt is a ploy to gain political support for his reelection,’  wrote.

‘No shame.’

Biden’s move means he has forgiven a total of $127 billion for 3.5 million borrowers, despite the fact that his plan to cancel $400 billion in debt was rejected by the Supreme Court in June.

Aides and supporters see it as nothing but good news, with their social media feeds filling with details. 

Even Republicans who complained that it meant ordinary taxpayers were footing the bill kept largely quiet after the latest announcement. 

The email – making clear that the help has come from Biden – read: ‘Congratulations — your student loan has been forgiven because of actions my administration took to make sure you receive the relief you earned and deserve.’ 

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Joe Biden’s Incoherent Student Loan Logic

In the hours after Friday’s Supreme Court ruling that struck down his attempt to forgive large amounts of federal student debt, President Joe Biden promised two new actions to ease borrowers’ burdens. The president’s next steps and his rhetoric suggest that little has changed in his flawed logic regarding student loan forgiveness—which has always seemed to have been more about electoral politics than serious policymaking, despite the huge price tag.

Going forward, Biden’s student loan plan will include the two steps announced Friday and one lingering element from his earlier proposal that wasn’t part of the Supreme Court’s review.

First, Biden has invoked a different federal statute in another attempt to unilaterally forgive some student debt. Under powers contained in the Higher Education Act of 1965, Biden intends to direct Secretary of Education Miguel Cardona to “compromise, waive, or release loans under certain circumstances.” That will be a federal ruling process, and those tend to take a while—the White House says the first step is a virtual public hearing on July 18—and it is unclear how much debt could be forgiven this way, who would benefit, or what the cost to taxpayers will be.

In the meantime, federal student loan payments will come due again in October after being paused since the COVID-19 emergency was declared in March 2020. But borrowers will be able to ease back into paying what they owe: Biden also announced Friday a 12-month “on-ramp” process during which missed payments will not accrue penalties and won’t result in delinquent borrowers having their credit scores dinged.

When they do restart, those monthly payments will be lower than before the pandemic for many borrowers. That’s due to the third part of Biden’s plan, which caps monthly payments at 5 percent of a borrower’s discretionary income—which the Department of Education defines as income that exceeds 150 percent of the federal poverty guidelines. In practice, that means a single borrower with no children starts making payments on income that exceeds $20,400. Additionally, outstanding loan balances will be forgiven after 10 years for those who borrowed $12,000 or less, with a maximum payment period of 20 years no matter how much was borrowed.

That part of the plan isn’t new, but the Department of Education finalized those rules on Friday just after the Supreme Court’s ruling. “It will cut monthly payments to zero dollars for millions of low-income borrowers, save all other borrowers at least $1,000 per year,” Cardona promised.

The consequences of capping monthly payments and also capping the length of time a loan can be in repayment should be fairly obvious: A lot of loans will never get paid back in full. “On average, borrowers (current and future) might only expect to repay approximately $0.50 for each dollar they borrow,” the Brookings Institution concluded in an analysis last year.

That’s going to create some major perverse incentives in the already screwed-up student loan marketplace. Brookings warns that Biden’s income-based repayment plan will result in “tuition inflation” and “increased borrowing,” particularly by students in pursuit of “low value, low earning” degrees.

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