The U.S. Department of Education today announced significant actions and proactive measures aimed at ensuring the integrity of federal student aid programs and protecting American taxpayer contributions.
A recent comprehensive analysis revealed that nearly $90 million had been disbursed to ineligible recipients, a figure that includes payments made to thousands of deceased individuals.
“As we continue to rehabilitate the student loan portfolio, we must also ensure there are accountability measures at every step of the student aid process,” stated U.S. Secretary of Education Linda McMahon. “From start to finish – filling out the FAFSA form to loan repayment – the American taxpayer underwrites federal student aid programs. We are committed to protecting and responsibly investing their hard-earned dollars.”
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The Department indicated that these new measures are among the initial steps to reinstate numerous protections that were in place before the COVID-19 pandemic. Officials also stated their intent to modernize the management of the loan portfolio to enhance service for borrowers and accountability to taxpayers, asserting that the Biden Administration had previously “deprioritized accountability in order to carry out its illegal student loan bailout agenda.”
Key Areas of Strengthened Oversight and Erroneous Payment Reduction:
- Deceased Aid Recipients: A cross-check of student aid records with the Social Security Death Index uncovered over $30 million in aid disbursed to thousands of deceased individuals over the past three years. The Department is now enhancing real-time data-sharing with the Social Security Administration to prevent future identity theft and erroneous payments.
- Immigration Parole Ineligibility: The Department has gained more specific student status information from the U.S. Department of Homeland Security (DHS) to prevent disbursements to individuals granted immigration parole status, who are not immediately eligible for federal student aid.
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Reinstatement of Key Protections and Tools:
- NSLDS® Post Screening: In May, the Department resumed automated post screening of student aid records for the 2024–25 and 2025–26 Free Application for Federal Student Aid (FAFSA®) cycles. This process is crucial for keeping student records current and preventing aid disbursement beyond eligibility limits, such as a student’s lifetime limit for Federal Pell Grants. Before its restoration, an estimated $10 million in improper Direct Loan payments were disbursed.
- FAFSA Identity Verification and Fraud Detection: In March, the Department reinstated flagging FAFSA applicants suspected of identity theft. A review found that as of early February, this lapse contributed to nearly $40 million in incorrect Direct Loan payments and an additional $6 million in Pell Grants to ineligible individuals. The Department utilizes data models to identify suspicious information on FAFSA forms, triggering further review.
The Department emphasized its ongoing collaboration with law enforcement partners to detect, investigate, and prosecute fraud. It also highlighted the importance of robust verification requirements for financial aid professionals, particularly concerning identity.
The office of Federal Student Aid continues to provide resources for students and parents on how to avoid student aid scams via StudentAid.gov/scams. This includes guidance on reducing the risk of identity theft during the federal student aid application process and steps to take if their information is fraudulently used.
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