Less Bureaucracy, Better Student Aid Act
Sponsored By: Representative Walberg, Tim [R-MI-5]
In Committee
Summary
This bill would shift responsibility for federal student aid from the Department of Education to the Department of the Treasury, creating a single federal home for loan servicing, collections, and program administration. It would also let the Secretaries of the Treasury and Education set the dates for each part of the transfer so the moves can be staged over time.
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- Families and borrowers would see Treasury handle loan servicing, repayment plans, borrower notifications, disputes, and both voluntary and involuntary collections. This includes default certification, rehabilitation, consolidation, bankruptcy matters, and credit reporting.
- Loan servicers and debt collectors would change which agency sets rules and manages operations for non-defaulted and defaulted loans. The bill covers routine servicing tasks like payment processing and repayment plan administration as well as collections actions.
- Colleges and program administrators would have Treasury assume oversight of major Higher Education Act programs named in the bill. That list includes Pell Grants, Federal Work-Study, the William D. Ford Direct Loan program, Federal Family Education Loans, Perkins Loans, need analysis rules, and other Title IV and related programs.
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Bill Overview
Analyzed Economic Effects
4 provisions identified: 1 benefits, 1 costs, 2 mixed.
More collection tools for defaulted loans
Beginning when the first transfers take effect, delinquent or defaulted federal student loan debt covered by this bill would no longer be exempt from a key federal collection statute (31 U.S.C. 3711). If enacted, this would let the government use additional collection tools and actions (for example, offsets or other collection measures described under that statute) against affected loans. The change would apply to loans under the named parts of Title IV and Health Education Assistance Loans that are held or assigned as described in the bill.
Move student aid to Treasury
This bill would move most federal student aid work from the Education Department to the Treasury in stages. It would transfer loan servicing, collections, Pell grants, Direct Loans, Perkins, FFEL, FSEOG, work-study, Health Education Assistance Loans, and related rules, staff, contracts, records, and unspent funds. The Secretaries of Education and Treasury would set the staged transfer dates and Treasury could use Education staff and funds to help the transition. Laws and rules that mention the Secretary of Education would be read to mean the Secretary of the Treasury for the transferred functions, and the bill sets definitions used to interpret these changes.
Pending student-aid cases kept active
If you have a lawsuit, application, or proceeding about student aid that started before this bill, the case would continue after the transfer. Treasury officials would be substituted for Education officials as needed. Existing orders, grants, contracts, rules, and administrative determinations tied to transferred functions would remain in force until changed by law or proper process.
No net federal job increase
The Director of the Office of Management and Budget would have to make sure these transfers do not increase net full-time federal jobs at affected agencies compared to the number on enactment day. OMB could move staff, property, contracts, grants, and unspent funds as needed to implement the transfers and to close out entities ended by the bill. OMB must certify to Congressional committees that each effective transfer date complied with the no-net-increase requirement.
Sponsors & CoSponsors
Sponsor
Walberg, Tim [R-MI-5]
MI • R
Cosponsors
There are no cosponsors for this bill.
Roll Call Votes
No roll call votes available for this bill.
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