Government Accountability Office Calls for Review of Verification Processes for Income-Driven Repayment Plans

U.S. Department of Education concurs with recommendations, which may cause scrutiny for ARM industry policies and procedures.

7/29/2019 9:30 AM

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Government Accountability Office Calls for Review of Verification Processes for Income-Driven Repayment Plans

The Government Accountability Office (GAO) recently issued recommendations to the U.S. Department of Education (DOE) to do more to verify the income and family size of borrowers enrolled in Income-Driven Repayment (IDR) Plans.

As the DOE works on these recommendations, accounts receivable management industry companies could see scrutiny related to their income verification policies and procedures.

IDR plans allow borrowers to make affordable monthly payments that are based on their income and family size and the remaining loan balance is forgiven after the repayment period.

The GAO found that more than 76,000 borrowers making no monthly payments may have had enough income to pay some amount and that more than 35,000 borrowers with “atypical” family sizes of nine or more were approved for plans, according to the report, “Federal Student Loans: Education Needs to Verify Borrowers' Information for Income-Driven Repayment Plans.”

The results, according to the GAO, show some borrowers may have misrepresented or erroneously reported their income or family size. As a result, without modified verification processes, the DOE may lose revenue from loan repayments and the cost of loan forgiveness could increase.

In a statement responding to the report, DOE Secretary Betsy DeVos concurred with review of the income and family size verification for borrowers.

“As the GAO highlights, the lack of accountability built into these programs creates significant risk for taxpayers,” DeVos said. “That's why the department has already looked at ways to better verify income and family size for all borrowers enrolled in income-driven repayment programs. However, without congressional action, we are unable to partner with the Internal Revenue Service to independently verify this information. I am again calling on Congress to provide the department the authority to independently verify income using IRS data.”

The DOE generally agreed with the GAO’s recommendations:

  1. Obtain data to verify income information for borrowers who report zero income on IDR plan applications;
  2. Implement data analytic practices and follow-up procedures to verify borrower reports of zero income; and
  3. Implement data analytic practices and follow-up procedures to verify borrowers' family size.

“While access to this IRS data is vital, until Congress passes legislation, we will work to be responsive to the GAO recommendations. The department is also working to identify and refer cases of suspected fraud to the Department of Justice for prosecution,” DeVos said.


Follow ACA International on Twitter @ACAIntl and @acacollector, Facebook and request to join our LinkedIn group for news and event updates. ACA International members are welcome to submit news items for possible publication to comm@acainternational.org. Visit our publications page for news submission guidelines and subscriptions to ACA Daily, Collector magazine and Pulse.

Advertising is available for companies wishing to promote their products or services. Be sure to visit the ACA Events Calendar on the Education and Training page to view our listing of upcoming CORE Curriculum and Hot Topic seminars featuring critical educational opportunities for your company.


Subscribe to ACA Daily NEWSROOM

Government Accountability Office Calls for Review of Verification Processes for Income-Driven Repayment Plans

The Government Accountability Office (GAO) recently issued recommendations to the U.S. Department of Education (DOE) to do more to verify the income and family size of borrowers enrolled in Income-Driven Repayment (IDR) Plans.

As the DOE works on these recommendations, accounts receivable management industry companies could see scrutiny related to their income verification policies and procedures.

IDR plans allow borrowers to make affordable monthly payments that are based on their income and family size and the remaining loan balance is forgiven after the repayment period.

The GAO found that more than 76,000 borrowers making no monthly payments may have had enough income to pay some amount and that more than 35,000 borrowers with “atypical” family sizes of nine or more were approved for plans, according to the report, “Federal Student Loans: Education Needs to Verify Borrowers' Information for Income-Driven Repayment Plans.”

The results, according to the GAO, show some borrowers may have misrepresented or erroneously reported their income or family size. As a result, without modified verification processes, the DOE may lose revenue from loan repayments and the cost of loan forgiveness could increase.

In a statement responding to the report, DOE Secretary Betsy DeVos concurred with review of the income and family size verification for borrowers.

“As the GAO highlights, the lack of accountability built into these programs creates significant risk for taxpayers,” DeVos said. “That's why the department has already looked at ways to better verify income and family size for all borrowers enrolled in income-driven repayment programs. However, without congressional action, we are unable to partner with the Internal Revenue Service to independently verify this information. I am again calling on Congress to provide the department the authority to independently verify income using IRS data.”

The DOE generally agreed with the GAO’s recommendations:

  1. Obtain data to verify income information for borrowers who report zero income on IDR plan applications;
  2. Implement data analytic practices and follow-up procedures to verify borrower reports of zero income; and
  3. Implement data analytic practices and follow-up procedures to verify borrowers' family size.

“While access to this IRS data is vital, until Congress passes legislation, we will work to be responsive to the GAO recommendations. The department is also working to identify and refer cases of suspected fraud to the Department of Justice for prosecution,” DeVos said.


Follow ACA International on Twitter @ACAIntl and @acacollector, Facebook and request to join our LinkedIn group for news and event updates. ACA International members are welcome to submit news items for possible publication to comm@acainternational.org. Visit our publications page for news submission guidelines and subscriptions to ACA Daily, Collector magazine and Pulse.

Advertising is available for companies wishing to promote their products or services. Be sure to visit the ACA Events Calendar on the Education and Training page to view our listing of upcoming CORE Curriculum and Hot Topic seminars featuring critical educational opportunities for your company.


Subscribe to ACA Daily NEWSROOM

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