H.R. 9609: Less Bureaucracy, Better Student Aid Act

This bill would move most federal student aid and student loan responsibilities from the U.S. Department of Education to the U.S. Department of the Treasury.

What would be transferred

The bill would shift to Treasury the main federal functions related to:

• servicing federal student loans, both for borrowers who are current and those who are in default
• collecting defaulted student loan debt, including repayment agreements, rehabilitation, consolidation, compromise, bankruptcy-related handling, dispute resolution, borrower notices, due process, and credit reporting
• administering repayment plans and processing payments for non-defaulted federal student loans
• student aid programs and eligibility rules, including:
  • Pell Grants
  • Federal Supplemental Educational Opportunity Grants
  • Federal Family Education Loan program functions
  • Federal Work-Study
  • Direct Loans
  • Perkins Loans
  • need analysis for aid eligibility
  • general student assistance rules
  • eligibility and certification procedures
  • the Health Education Assistance Loan program

How the transfer would work

The Secretaries of Education and Treasury would jointly set the effective dates for the transfer, and the changes would happen in stages. The bill says the transfer of defaulted-loan functions would happen first, then non-defaulted loan servicing, and then the remaining student aid functions.

Authority and staffing

Once the functions are transferred, Treasury would have the same legal authorities that Education had for carrying them out. The bill would also transfer to Treasury the related personnel, records, contracts, property, liabilities, and unspent funds tied to those functions. Those transferred funds would still have to be used for their original purposes.

Limits on staffing changes

The Office of Management and Budget would be required to make sure the transfer does not increase the total number of full-time federal employees at the affected agencies. It could also make the administrative adjustments needed to complete the transfer and certify compliance to Congress.

Legal continuity

Existing rules, decisions, grants, loans, contracts, and other official actions tied to the transferred functions would generally stay in effect unless changed later under the law. Pending applications, proceedings, and lawsuits would continue without being canceled just because the functions moved to Treasury.

Debt collection change

The bill would end an exemption that currently lets certain delinquent or defaulted federal student loans avoid some requirements under the Debt Collection Improvement Act. In practical terms, those debts would no longer be able to use that exemption once the transfer takes effect.

Transition

To help with implementation, Treasury would be allowed to temporarily use Education Department staff, assets, and funds connected to the transferred functions during the transition period.

Relevant Companies

None found