House Republicans are seeking clarity on Biden’s student loan consolidation program’s legality

EXCLUSIVE — A group of House Education and Workforce Committee Republicans, led by Chairwoman Virginia Foxx (R-NC), raised concerns on Friday about whether the Biden administration’s student loan consolidation scheme is illegal.

In a letter obtained exclusively by the Washington Examiner, Foxx and 12 Republicans demanded answers from Education Secretary Miguel Cardona about the legality of consolidating Federal Family Education Loans into the Direct Loan program “in order to further its ‘free’ college agenda.”

“The Biden administration has relentlessly pursued shifting the burden of repaying federal student
loans onto taxpayers with complete disregard to its legal authority,” the letter said, adding that other matters, such as the bungled Free Application for Federal Student Aid, or FAFSA, rollout, have “demonstrated the Department’s serious need for increased oversight and accountability.”

The letter comes as the Biden administration continues to find ways to “cancel” student loan debt, which critics say is forcing taxpayers to foot the bill for elite college degrees.

The lawmakers raised questions about whether the Biden administration is allowing ineligible borrowers with FFEL loans to consolidate their debt using federal programs that are supposed to limit significantly the types of borrowers who can access them.

FFEL loans are an old version of loans that are federally guaranteed, but sourced from private lenders. With the passage of Obamacare, the federal government decided to phase out guaranteeing loans from private lenders in favor of the Direct Loan Program, which made the federal government the lender and guarantor. With the Biden administration’s debt cancelation scheme, the concern among critics is that the administration is attempting to expand the definition of who is eligible for cancelation and allowing those who still hold FFEL loans to consolidate into Direct Loans outside the bounds permitted by law.

The Office of Federal Student Aid is designated as a performance-based organization within the federal government, meaning it can receive more scrutiny of personnel and must meet higher operational standards than most government offices “to increase the accountability of the officials responsible for administering the operational aspects of these programs,” the letter stated.

The FSA’s status as a PBO, particularly in light of the botched FAFSA rollout and other headaches, was “outrageous and a dereliction of duty” that requires “the need for intense Congressional oversight.”

“Given FSA’s abominable history of flouting the law and skirting consequences, we have no confidence in the Department’s ability to follow the directives of Congress detailed in the [Higher Education Act],” the letter said.

The lawmakers are seeking internal federal communications related to loan consolidation concerns and guidance from the department to student loan servicers to ensure FFEL consolidation is being done legally.

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Foxx was joined by Reps. Burgess Owens (R-UT), Joe Wilson (R-SC), Glenn “GT” Thompson (R-PA), Tim Walberg (R-MI), Elise Stefanik (R-NY), Rick Allen (R-GA), Jim Banks (R-IN), Lloyd Smucker (R-PA), Michelle Steel (R-CA), Julia Letlow (R-LA), Aaron Bean (FL), and Brandon Williams (R-NY).

An Education Department official told the Washington Examiner, “The Department has received the letter and will respond to the authors.”