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  • GAO Releases Data to Support Report Identifying Potential for Fraud Among Borrowers in IDR Plans

GAO Releases Data to Support Report Identifying Potential for Fraud Among Borrowers in IDR Plans

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NASFAA

Owen Daugherty
October 5, 2020
As the prevalence of income-driven repayment (IDR) plans continues to rise, new data released by the Government Accountability Office (GAO) shed some light on emerging trends, how the plans are being utilized, and what type of borrowers are taking advantage of them.
IDRs use borrowers’ taxable income and family size to determine an affordable payment rate, with some borrowers qualifying for as low as $0 monthly payments that still count toward loan forgiveness within a certain time frame.
The GAO report including additional data comes after the office in June of 2019 identified the potential for fraud or error as borrowers self-report information. And while GAO wrote at the time that it found some borrowers “may have misrepresented or erroneously reported their income or family size,” it could not “determine whether fraud occurred through data matching alone.” GAO has now released supplemental data to further drill down to analyze the potential for fraud.
When assessing indicators for potential fraud based on errors in self-reporting income information, GAO disaggregated data for two variables — IDR application type and loan servicer.
Of the nearly 878,500 plans it examined, 95,100 plans were held by borrowers who made no monthly payments — yet may have had enough income to pay something. Of the 95,100 plans identified, GAO found roughly two-thirds of them were new applications.

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