$1.2 Billion, Forgone?

Lack of agreement over access to U.S. database of workers has impaired Education Department's ability to collect money from defaulted borrowers.
March 17, 2010

WASHINGTON -- Given the huge sums of money that the Education Department has been bandying about in recent months -- tens of billions of dollars in last year's economic recovery legislation, and similar amounts in the student loan reform bill now before Congress -- the idea of worrying about hundreds of millions of dollars seems almost quaint.

But several members of Congress are expressing concern about why the U.S. Education Department and the Department of Health and Human Services have been unable to reach agreement on the former's use of a database managed by the latter that allows student loan guarantee agencies and others to track student loan borrowers who aren't repaying their debt. The forgone revenue from the lack of a "matching agreement" between the two agencies for more than a year now is $1.2 billion, according to the letter from four Democratic members of the House of Representatives.

"There is an overwhelming financial benefit to taxpayers and ED to reinstitute the data matching," money that could be used to "fund higher education opportunities for students and families," the lawmakers wrote to Education Secretary Arne Duncan last month. "Therefore, it is imperative that disagreements between HHS and ED be resolved as quickly as possible so that the successful ... matching program can continue."

Officials at both the Education Department and the Health and Human Services agency said they were not in a position to discuss the situation in any significant way. An Education Department spokeswoman said that the agency makes it a practice to respond to letters from members of Congress directly to the lawmakers themselves first, and that the department was preparing an answer to the four Democrats: Reps. Travis Childers of Mississippi, Jim Cooper of Tennessee, Walt Minnick of Idaho, and Heath Shuler of North Carolina.

A spokesman for the Administration for Children and Families, the branch of HHS that administers the National Database of New Hires, said its officials would defer to the Education Department to comment. The spokesman took issue, though, with a reporter's characterization of the situation as a "disagreement" between the two agencies. "I wouldn't say it's a disagreement," he said. "The two agencies have just not yet been able to reach an agreement."

Either way, the bottom line is that since December 2008, the two agencies have not been conducting the quarterly matching of data from the Education Department's database of borrowers with the National Database of New Hires, a directory of wage earners that the Health and Human Services Department uses to find deadbeat dads and others behind in their child-support payments.

Congress expanded use of the database to the Education Department in 1999 to help locate "student loan borrowers who are employed but not making payments on their defaulted student loans," and in recent years guarantee agencies and others have recovered $1.2 billion a year through the matching program, the lawmakers wrote to Duncan.

But the agreement between the two agencies over use of the database expired at the end of 2008, and although both agencies say they have been working on a new accord, "a new agreement has yet to be reached and a match has not occurred for nearly a year," the lawmakers wrote on Feb. 1. Their letter attributes the lack of an accord to "concern over the applicability of the Federal Information Security Management Act," a 2002 law.

"Using the revenue estimate of $1.2 billion referenced above, as much as $100 million in default recoveries is lost each month that the impasse continues between ED and HHS," they wrote, asking Duncan for a "status update" on the negotiations between the two departments and an "assessment of the revenues foregone" since the end of 2008. (Implicit in the lawmakers' letter is an assumption that the money that the department and guarantors were unable to collect in the last 15 months cannot be recovered after the fact, but administration officials reportedly assert otherwise.)

That $1.2 billion may not be enough to close the gaps in the $60 billion student loan bill now before Congress, but several weeks' worth of the money would make it possible to continue the Leveraging Educational Assistance Program that the Obama administration proposes ending, and one month would allow the Education Department to continue the Tech-Prep career education program for a year.


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