WASHINGTON, DC – Rep. French Hill (AR-02) named the Department of Education as the latest recipient of his Golden Fleece Award due to the agency’s gross miscalculations of the William D. Ford Direct Loan program, at the expense of the federal government and the American taxpayer.
“Since the establishment of the federal Direct Loan program, the Department of Education has continuously miscalculated the amount of income that would be generated by the program for the federal government. Instead, the program has cost the federal government and the American people nearly $200 billion. Rather than determining the “actual costs” of the Direct Loans at the end of the loan term, the Department of Education needs to reexamine its current policies and develop policy that will rectify the costs and generate income for the federal government. Due to the poor oversight of the William D. Ford Direct Loan program, I am naming the Department of Education as the latest recipient of my Golden Fleece award.”
In a letter to Secretary Miguel Cardona, Rep. Hill writes:
Dear Secretary Cardona:
I write to you today to inform you that the Department of Education is the latest recipient of my Golden Fleece award for its miscalculations of the William D. Ford Direct Loan (Direct Loan) program costing the federal government and American taxpayers $197 billion.
According to the Government Accountability Office (GAO), the Department of Education significantly underestimated the cost of the Direct Loan program by $311 billion. The GAO’s recent report on the loan program shows that from 1997 to 2021, the Department of Education estimated the federal Direct Loan program was intended to generate about $114 billion in income for the federal government. However, miscalculations from the Department of Education cost the American taxpayers and the federal government $197 billion.
The Direct Loan program has been riddled with problems since its establishment. The Department of Education must determine where the buck stops financially. I support students having access to a college education, but this program is not a sustainable option. Over time, the Direct Loan program repayment and forgiveness options have changed. According to the GAO Report, “COVID-19 emergency relief provided from March 13,2020 through April 30, 2022 was estimated to increase Direct Loan costs to the federal government by about $102 billion.” I understand providing emergency relief for a short period of time, but given the cost of the Direct Loan program, it is time that the Department of Education reexamines its current policies.
Americans have been fleeced out of nearly $200 billion from the Department of Education’s grave miscalculations and that’s unacceptable. I also find it extremely concerning that the Department of Education will only learn the actual costs of the Direct Loans at the end of the loan term. This is concerning because “No Direct Loan cohort has finished repaying all of its loans since the start of the program in 1994.” These miscalculations must be corrected and new policies should be put into place by the Department of Education to rectify the costs incurred on the American taxpayer.
Should you require any additional authority from Congress to address these concerns, I urge you to notify me as soon as possible. I sincerely thank you for your consideration and look forward to working with you to address this important issue.
Member of Congress