The U.S. Department of Education revealed that over $30 million in federal student aid had been distributed to thousands of deceased individuals during the past three years.
The disclosure followed an internal cross-check of student aid records against federal grant logs and the Social Security Death Index.
Why It Matters
The discovery of erroneous payments totaling over $30 million to deceased individuals raises significant concerns about the integrity of federal financial aid programs, which are funded by U.S. taxpayers.
President Donald Trump‘s administration has been emphasizing the amount of money the government is wasting and has been trying to eliminate unnecessary expenses.
What To Know
The Department of Education’s review found that, over the previous three years, more than $30 million in federal student aid was paid out to thousands of recipients who were already deceased. These payments included both loan disbursements and grant funds.
Officials identified the problem by cross-referencing student aid records with the Social Security Death Index. They stated that the lack of real-time data sharing contributed to erroneous payments, as outdated records failed to flag recipients who had died, allowing automatic disbursements to proceed.
To address the issue, the Education Department reported it is strengthening its real-time data-sharing agreement with the Social Security Administration (SSA) and enhancing administrative processes to detect eligibility changes more quickly.
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These steps aim to close loopholes that permitted deceased individuals to remain listed as eligible for aid.
The department also announced the resumption of automated post-screening for student aid records, a process that was paused during the COVID-19 pandemic.
Education Secretary Linda McMahon stated that these checks are crucial for ensuring that all recipients meet the eligibility criteria before additional aid is released.
The $30 million misallocated to deceased recipients was part of a larger total: nearly $90 million was distributed to ineligible recipients during the same period, according to the Department of Education.
Despite the large number, experts say the level of fraud is still relatively low.
“As we know, in any system, public or private, mistakes and fraud can occur,” Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek. “This $90 million figure represents less than 0.10 percent of the total average government outlay of $87 billion for student loans.”
He added: “The attention this is getting is purely a result of the scale, and it actually highlights how well the system has performed.”
What People Are Saying
Education Secretary Linda McMahon, in a press release: “As we continue to rehabilitate the student loan portfolio, we must also ensure there are accountability measures at every step of the student aid process…We are committed to protecting and responsibly investing their hard-earned dollars.”
Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek: “Unfortunately, like most other government programs, the student loan system can be subject to fraud and technical error that results in individuals who shouldn’t receive funding becoming loan recipients. And while $90 million in loans provided to deceased individuals may sound shocking to many Americans, and certainly needs to be fixed, it’s important to note from a financial standpoint, it’s a drop in the bucket to the over $1.5 trillion in outstanding student loan debt issued.”
What Happens Next
The Department of Education has committed to further technological upgrades and ongoing collaboration with the SSA to prevent improper payments to deceased or otherwise ineligible individuals. Updates to oversight and data-sharing mechanisms are expected to be implemented over the next fiscal year.
Because the Trump administration has prioritized cutting out waste and fraud, there will likely be increased focus on this type of federal government mismanagement of funds moving forward, Thompson said.
“This will have very little impact on the Education Department, as the error rate was relatively insignificant,” Thompson said. “In the long run, however, this will likely be politicized as an example of fraud and waste in the system, rather than recognized as a success due to the high approval and completion rates.”