Smucker & Foxx Grill Education Department for Bogus Cost Estimate of Biden’s Student Loan Bailout

WASHINGTON – Yesterday, Rep. Lloyd Smucker (PA-11) and Education and the Workforce Committee Chairwoman Virginia Foxx (R-NC) sent a letter to U.S. Department of Education Secretary Miguel Cardona blasting the Department for its attempted cover-up of the real cost of President Biden’s illegal student loan bailout. In the letter, the lawmakers request documents from the Department on the development of its final cost estimates, noting that the process “fell woefully short of common auditing standards.”

Like many federal agencies, the Department of Education hired an independent auditor, KPMG LLP (KMPG), to perform an audit on its Fiscal Year 2022 consolidated financial statements. However, KPMG was unable to sign off on the audit because the Department of Education failed to provide sufficient evidence regarding its calculations of the cost of President Biden’s student loan forgiveness program.

KPMG noted specifically that the Department of Education internal controls “were not properly designed” to calculate the loan program estimates and, therefore, there is a high risk that ED’s financial statements are “materially misstated.”

In the letter, the Members write: “We write to express our grave concerns about the failure of the Department of Education (‘Department’) to provide sufficient evidence for its independent auditor, KPMG LLP (‘KPMG’), to form an audit opinion on the Department’s Fiscal Year (FY) 2022 consolidated financial statements. This is yet another example of this administration’s lack of transparency when it comes to wasteful spending of taxpayer dollars. The American people deserve better.”

The Members continue: “Your Department’s ‘evidence’ underlying the cost estimates for its massive student loan debt relief plan fell woefully short of common auditing standards. … As KPMG’s Disclaimer of Opinion notes, the Department’s internal controls ‘were not properly designed ... to address the relevance and reliability of the ... data used to develop the [loan] take-up rate assumption used in the various loan program estimates.’ … The loopholes in the Department’s responses, as well as their vagueness, raise substantial questions about the Department’s intentions.”

The Members conclude: “Given your Department’s track record of hiding the costs of the Direct Loan and Federal Family Education Loan programs, we are greatly concerned about the lack of a sufficient evidentiary basis for the cost estimates of the President’s illegal debt relief plan.”

Read the full letter here.

Background:

• An initial report from the Congressional Budget Office indicated that the administration’s cancelation actions would cost an estimated $400 billion.
• The estimated $2,500 per taxpayer cost will be paid by the overwhelming majority of Americans who never attended college.
• The Supreme Court of the United States heard arguments in two cases regarding the Biden administration’s student loan debt transfer scheme on February 28, 2023.
• Rep. Smucker responded to President Biden’s action, by issuing a statement, which reads in part: “Biden must clearly tell Congress and the American people under what constitutional authority this action has been taken. This action appears to be a massive expansion of executive power taken without the authorization of Congress and without basis in the powers afforded the president in current law… What does President Biden have to say to those who already paid their federal student loans? What does the president have to say to the overwhelming majority of Americans who never took out student loans?”