FEDS: THOUSANDS MAY HAVE STUDENT DEBT THAT SHOULD BE ERASED

Record-keeping failures by the federal government may have left thousands of Americans saddled with student debt that should have been automatically canceled through a benefit for low-income borrowers, according to a new federal study.

In a scathing report released this week, the Government Accountability Office faulted the Education Department for sloppy oversight of its income-driven repayment program — a collection of plans that offer reduced monthly payments and carry a promise to erase all remaining debt after 20 or 25 years of payments.

The study, requested by Congress, identified 7,700 federal student loans that appear to meet the conditions for loan forgiveness but had yet to be canceled as of September 2020. The loans were held by 3,000 borrowers and amount to a combined $49 million.

It was released a day after the Education Department announced changes to fix what it called “historical failures” of the program. Those changes are expected to help some borrowers get their loans discharged more quickly.

Investigators said they couldn’t verify why the loans hadn’t been forgiven — gaps in the Education Department’s data made it impossible to know for sure. But they suggested it could be the result of poor record-keeping.

Before 2014, the report said, the department failed to make sure borrowers’ monthly payments were being tracked. That in turn has prevented the agency from tracking borrowers’ progress toward loan forgiveness, leaving some repaying loans longer than they should have.

So far, only 157 loans have been forgiven through income-driven plans, according to the study.

“The Department of Education has had trouble tracking borrowers’ payments and hasn’t done enough to ensure that all eligible borrowers receive the forgiveness to which they are entitled,” the GAO said. “We found thousands of borrowers still in repayment who could be eligible for forgiveness now.”