A bill in Congress could shut off hundreds of thousands of education loans for students in 2018, leaving many with no option but to default.
But a new report from the Education Department’s inspector general says the bill is misguided.
“The bill fails to provide adequate oversight to ensure that the loans are properly applied and paid for,” said the inspector general, who is examining the law to determine if it can be enforced.
The Education Department is considering a series of recommendations for the law, which would force colleges and universities to repay loans that were improperly obtained.
Some of the students who received the loans have already defaulted, according to the report, which was obtained by The Associated Press.
The inspector general’s findings, which could affect millions of students, come as colleges and schools struggle to cope with the new administration’s agenda to tighten up the US’s struggling schools and universities.
The law, called the Higher Education Act of 2018, is designed to ease the federal debt burden on students by allowing them to receive up to $1,000 for a bachelor’s degree, as well as $2,000 and $3,000, respectively, for a master’s.
The federal government already pays tuition for most public colleges and more than half of all public universities.
But it was designed to make students repay more quickly for the loans than their federal loans, and not at a lower rate, according a spokeswoman for the Department of Education.
She said it would not affect the way colleges and other institutions calculate loan repayments.
The department said the bill provides borrowers with the flexibility to repay the loan at a more manageable rate than their loan amount, which it described as a reasonable cost.
The bill does not require colleges and institutions to provide information to students or their families, the spokeswoman said.
But the report says that the bill also fails to address the need for transparency and requires schools to disclose how many students have defaulted on the loans.
The secretary of education’s office did not immediately respond to requests for comment.
The report said the department’s inspector is investigating how colleges and public universities handle loan defaults, how they use student data, and how they track loan repayings.
In the report’s summary, the inspector said that a number of colleges and agencies are required to provide more information to borrowers about how their loans are applied and collected.
The inspector general said some of the information the department has received is inadequate.
The administration’s push to make colleges and government-supported universities more accountable for their student loans has raised concerns about how the money will be spent.
The $2.3 billion that the Obama administration has spent on college loan servicing over the last five years has resulted in thousands of schools and hundreds of millions of dollars in debt.
Some states have already taken steps to close schools and cut spending, but the federal government has taken a much tougher stance.
The Education Department has proposed a series, including one that would allow colleges to repay all student loans.
Critics have called the bill an overreach and said it could put too much of the burden on the most vulnerable students.
“It’s time to end this madness,” said Rep. Debbie Dingell, D-Mich., who introduced the Higher Ed Act in February to try to rein in the soaring costs of higher education.
“I’ve been calling on Congress to take a fresh look at this law.”