Judicial Watch Sues Education Department over Cover up Of Increasing Student Loan Failures

(Washington, DC) – Judicial Watch announced that it today filed a Freedom of Information (FOIA) lawsuit in the U.S. District Court for the District of Columbia against the U.S. Department of Education seeking records relating to then Obama administration’s “coding error” that resulted in masking that most borrowers are failing to pay down their federally-subsidized student loans (Judicial Watch v. U.S. Department of Education (No. 1:17-cv-00501)).

The Obama administration’s Obamacare legislation also included provisions that resulted in the federal takeover of the student loan industry, which radically increased taxpayer subsidies of higher education loans.

The Education Department acknowledged in early January that the coding error resulted in wildly inaccurate College Scorecard repayment rates. The significance is substantial, according to The Wall Street Journal:

The department played down the mistake, but the new average three-year repayment rate has declined by 20 percentage points to 46%. This is huge. It means that fewer than half of undergraduate borrowers at the average college are paying down their debt.

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Last month the Government Accountability Office (GAO) projected that loan forgiveness for borrowers enrolled in the plans could cost upward of $108 billion. GAO rapped the department for underestimating the costs due to “insufficient quality controls” and “unreasonable assumptions.” It’s possible the putative “coding error” is connected to this ill-management.

As the Journal notes, “The other scandal is that the Obama Administration used the inflated Scorecard repayment data as a pretext to single out for-profit colleges for punitive regulation.”

Judicial Watch filed today’s lawsuit after the department failed to respond to a January 29, 2017, FOIA request for:

• Any records concerning the coding error in the calculation of repayment rate data contained in the College Scorecard, as disclosed on January 13, 2017. . . . Requested records include, but are not limited to, records identifying causes of the coding error and steps taken to correct the error, communications within [the Education Department] regarding the error, communications with third parties concerning the error, and records relating to the public announcement of the error.

“The government-run student loan racket is a disaster for taxpayers and has been abused to target for-profit competitors of liberal-controlled ‘public’ universities,” said Judicial Watch President Tom Fitton. “The Trump administration should quickly respond to our FOIA lawsuit about this scandal.  The Trump administration has an opportunity to drain the swamp in higher education by exposing the truth about their expensive taxpayer subsidies.”

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