oversight

Letter to Senator Murray regarding our 2017 report titled, "Federal Student Aid's Borrower Defense to Repayment Discharge Process"

Published by the Department of Education, Office of Inspector General on 2018-01-04.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                        UNITED STATES DEPARTMENT OF EDUCATION
                                       OFFICE OF INSPECTOR GENERAL


                                                                                                 THE INSPECTOR GENERAL



January 4, 2018


The Honorable Patty Murray
Ranking Member, Committee on Health, Education, Labor and Pensions
United States Senate
Washington, D.C. 20510


Dear Ranking Member Murray:

Thank you for your letter of December 21, 2017, requesting additional information on our
recent report titled Federal Student Aid's Borrower Defense to Repayment Loan Discharge
Process. Attached you will find our answers to your questions. As we shared with your staff, we
cannot provide the documents that you requested as they are not Office of Inspector General
documents. We shared your request with Molly Petersen, Legislative Director of the U.S.
Department of Education Office of Legislation and Congressional Affairs, on January 2, 2018, as
the Department would be responsible for responding to your request.

If you have any questions or if you need any additional information, please do not hesitate to
contact me directly at {202) 245-6900 or have a member of your staff contact our Congressional
Liaison, Catherine Grant, at (202) 245-7023.




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Sincerely,



    < .....,,__ s: ) rv------
Kathleen S. Tighe
Inspector General


cc:    The Honorable Lamar Alexander, Chairman, Committee on Health, Education, Labor,
       and Pensions, United States Senate
       The Honorable Betsy Devos, Secretary, U.S. Department of Education




                              400 MARYLAND AVENUE, S.W., WASHINGTON, DC 20202-1510

              Promoting the efficiency, effectiveness, and integrity ofthe Department's programs and operations.
          U.S. Department of Education Office of Inspector General (OIG)
Response to Ranking Member Murray, Senate Health, Education, Labor and Pensions
                     Committee Regarding OIG Report Titled,
   "Federal Student Aid's Borrower Defense to Repayment Loan Discharge Process"
                                    January 4, 2018

1. What additional outcome data for the processing of borrower defense claims did
   Federal Student Aid (FSA) provide to your office on October 26, 2017, as noted in
   footnote 57

   OIG Response: FSA's Business Operations provided an updated "Review Ready
   Spreadsheet" as of October 10, 2017. The spreadsheet specifies the general status of
   each claim as approved, pending, or ready for review. As noted in our report, we did not
   analyze this spreadsheet.

2. The report indicates that FSA's Borrower Defense Unit (BDU) reduced contractor staffing
   by more than two-thirds from November 2016 to September 2017. Did FSA provide a
   rationale for this decrease in staff, even as the number of claims mounted?

   OIG Response: FSA's BOU did not provide a specific rationale for the decrease in staff.

3. With regard to the category of borrower defense claims related to ITT guaranteed
   employment misrepresentation noted on page 10, did FSA maintain legal memoranda or
   other documentation for these findings that indicate to how many potential borrowers
   and states such claims would apply?

   OIG Response: FSA's BOU maintained one legal memorandum related to
   misrepresentations of ITT guaranteed employment. The memorandum applies only to
   only the California locations but does not indicate the number of potential borrowers.
   FSA's BOU did not provide documentation for ITT guaranteed employment
   misrepresentation claims that indicated the number of potential borrowers or the states
   where they were located.

4. According to your analysis of unique claims that did not fall within one of BDU's seven
   established categories, "[a)s of January 20, 2017, BDU had identified additional
   categories of claims warranting further research." According to FSA, how many
   additional categories of claims had BDU identified?

   OIG Response: FSA's BOU stated that with respect to Corinthian schools, it had started
   research and analysis for five additional categories. With respect to schools other than
   Corinthian, FSA was in the processes of gathering and reviewing evidence.


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5. The report notes on page 16 that the further research into additional categories of
   claims was "placed on hold." According to FSA, why was this research stopped?

   O/G Response: FSA's BOU stated that in early 2017, the Enforcement Unit was instructed
   not to continue developing new memoranda on additional categories of claims at the
   direction of the Acting Under Secretary and the Review Panel.

6. The report on page 21 notes that as of September 2017, FSA was testing a claims
   management tool. Did FSA indicate when development of this tool commenced and
   when it is expected to be operational?

   O/G Response: FSA's BOU did not provide definitive information on when the
   development of the claims management tool commenced or when it is expected to be
   fully operational. The tool was in development when we began our review.

7. Which political appointees from the Obama Administration that were involved in
   writing, or received, the legal memorandums referenced in the report did you interview
   for this report, respectively?

   O/G Response: The objectives of our review were to (1) determine FSA's policies and
   procedures over its Federal student loan borrower defense loan discharge process, (2)
   determine the documentation FSA maintains to support its borrower defense loan
   discharge decisions, and (3) determine the outcomes of FSA's borrower defense loan
   discharge proceedings. We did not interview political appointees from the previous
   administration because it was not necessary to achieve the objectives of our review. The
   objectives of our review did not include reviewing the development of the legal
   memoranda or the decisions made in the memoranda.




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