The U.S. Department of Education has announced new measures to ensure that federal student aid funds are used properly. A recent analysis revealed nearly $90 million was disbursed to ineligible recipients, including payments to deceased individuals.
U.S. Secretary of Education Linda McMahon stated, “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.” She emphasized the importance of protecting taxpayer dollars from misuse.
The Biden Administration had previously deprioritized certain accountability measures. The current actions aim to restore protections that were reduced during the COVID-19 pandemic and improve management of the loan portfolio for better service and accountability.
To address issues with deceased aid recipients, a cross-check against the Social Security Death Index found over $30 million in erroneous disbursements over three years. The Department plans to enhance data-sharing with the Social Security Administration to prevent future identity theft and errors.
Additionally, individuals with immigration parole status, which is temporarily granted by DHS, are not eligible for federal student aid. The Department has worked with DHS for more accurate identification of such individuals.
Key tools include resuming automated post-screening of FAFSA records for upcoming cycles. This process ensures records reflect changes in eligibility, such as lifetime limits on Pell Grants. Approximately $10 million in improper Direct Loan payments occurred before this screening was restored.
In March, the Department resumed efforts to flag potential identity fraud in FAFSA applications. By early February, nearly $40 million in Direct Loan payments and $6 million in Pell Grants were wrongly disbursed due to identity issues. Data models now help identify suspicious applications requiring further review.
The Department collaborates with law enforcement on fraud detection and emphasizes robust verification practices among financial aid professionals.
Students and parents can find resources on avoiding scams at StudentAid.gov/scams, including steps to mitigate identity theft risks when applying for aid.
