Federal Student Loans: Education Needs to Verify Borrowers' Information for Income-Driven Repayment Plans. Report to Congressional Requesters. GAO-19-347

As of September 2018, almost half of the $859 billion in outstanding federal Direct Loans was being repaid by borrowers using income driven repayment (IDR) plans. Prior U.S. Government Accountability Office (GAO) work found that while these plans may ease the burden of student loan debt, they can carry high costs for the federal government. This report examines: (1) whether there are indicators of potential fraud or error in income and family size information provided by borrowers on IDR plans; and (2) the extent to which Education verifies this information. GAO obtained Department of Education (Education) data on borrowers with IDR plans approved from January 1, 2016 through September 30, 2017, the most recent data available, and assessed the risk for fraud or error in IDR plans for Direct Loans by: (1) matching Education IDR plan data for a subset of borrowers who reported zero income with wage data from the National Directory of New Hires (NDNH) for the same time period; and (2) analyzing Education IDR plan data on borrowers' family sizes. In addition, GAO reviewed relevant IDR policies and procedures from Education and interviewed officials from Education. GAO recommends that Education: (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. Education generally agreed with GAO's recommendations.